Haleon Aktie

Okay. Good afternoon, everybody, and thank you very much for joining this session, and thank you very much indeed, Brian, for joining us here in Paris. Good to see you here.

So Brian, perhaps before we dive into the business, you've been the CEO of Haleon now for 4 years. How have your priorities changed over that time period? And what are your key strategic priorities now?

Yes. Listen, I think if you take a step back, we listed in July of '22, so coming up on 4 years. I think of Stage 1 was separate from GSK, focus on delivering continuity of the business, delivering the growth, delivering on the commitments, building the corporate functions, tax, treasury, new Board, all those kind of things.

I think we successfully did that. We also had 2 big things we needed to address, 4x leverage and 45% overhang of our previous owners, Pfizer and GSK. So 2 years in, we've kind of dealt with all of that, built the company, stood it up, got rid of the overhang, leverage down to around 2.5x.

Then I think the next phase for me was then building out the leadership team. Team that took us the separation was fantastic, but we probably needed a different group of people to realize the full potential and do that. We started that journey a couple of years ago. First hire was Namrata Patel, my supply chain head, 15 members of my team, 13 of them are new since the separation.

Then about a year ago, we did a Capital Markets Day, and that's when we laid out kind of the priorities going forward. So simply put, I'd say #1 priority is growth. And listen, we guided to 4% to 6% growth in the medium term. Last year, we delivered 3%. This year, we guided to 3% to 5%. So I realize we're below that algorithm, but we're very focused on getting that growth back. A lot of the drag in that growth was seasonality and things like that. So we're working through that. And the other big focus for us within that is -- while growth this year, we've guided 3% to 5% competitiveness, market share is a big, big focus.

We ended last year at 60% of the business, maintaining and growing share. That's improved, and we shared that number at half year results, but we're seeing real improvements in our competitiveness across the area geographically.

The ability to do that links to priority #2, which is the productivity. A year ago, we laid out the GBP 800 million of really supply chain savings, productivity savings, which lead to 50 to 80 basis points of gross margin improvement over the next number of years. What that's allowed us to do.

And last year, we delivered 220 basis points of gross margin improvement, taking us to 65%. So what that's allowed us to do is it gives us tremendous flexibility. One, to continue to invest in the business, even though top line has been a bit more challenged, so making ourselves more competitive, but also being quite confident in high single-digit operating profit growth, which will translate into very strong EPS growth on the business in a year where we're guiding 3% to 5% and not 4% to 6%. Really confident in our ability to deliver that, and it's going extremely well.

And again, at half year, we would review where we're at on that journey. I think the third is culture, and it has to do with the new team we put in place, but also the announcements we made in January about a new operating model. And basically, we've now structured in 6 operating units, 3 global categories, we've taken an entire layout out of the organization, 2 layers in some cases and really streamlining and simplifying how we're doing work.

In the U.S., we were able to do that on January 8, top to bottom. Right now, we're in consultation across European markets. We expect the new operating model to be fully in place in mid-July. And for me, that was the last step in this transition of division of a big pharma company to a stand-alone CPG company. So it's really -- it's about growth, #1 priority, productivity culture.

Okay. Fantastic. Thank you. So perhaps before -- well, if we could talk about the business through a geographic lens. First, you're building out your capabilities in emerging markets. How much larger is that investment now across EMs. To what extent do you feel you need or want to build out the capabilities in distribution or A&P? And what are some of the successes for you in the bigger markets?

Yes. Why don't I take that through the lens of our 2 most important and bigger emerging markets of China and India. So if you step back and look at China, we invested about GBP 600 million. We closed that a year ago in buying out our joint venture partner. So we own 100% of that business. We had a joint venture on the OTC part of the portfolio. So now we fully own that business, financially made a lot of sense, EPS accretive, but it also gives us now full control of our business in China. We felt like that was important.

I was in Shanghai 6 weeks ago or so. We announced we're building a new plant in Shanghai, and this to support our oral health business because we have a fantastic oral health business in China. We launched parodontax as a second brand of Sensodyne in China about a year ago, and we see significant opportunities there.

Now if you look at from a distribution perspective, 40% of our business in China is online, breaks down into 3 areas. First is traditional e-com. Good business for us, growing really well. Margin-wise, kind of maybe in line with our business. Then there's online to offline, which is quick commerce through the pharmacy, extremely profitable business for us, and we're very, very strong there. And it plays to our OTC portfolio.

Third is Douyin, TikTok and social commerce. On social commerce, OTC cannot -- you can't market OTC on the Douyin platform. And 2/3 of our portfolio is in OTC in China. Even some of our VMS are classified as OTC. That's an area where we're doubling down and we're investing both in capability, but also in portfolio.

So we have a number of innovations that we're going to bring in, some of the cross-border e-commerce, some of the local to really get our portfolio more fit for purpose for Douyin. Harder channel to make money on, if I'm honest, it's less profitable, but that's where consumers are. And again, with our gross margin and the gross margin improvement, we have the flexibility to make those kind of investments and ensure that we're growing in a very fast-growing channel.

Separate from that, Tier 2, Tier 3 cities is still an opportunity. Our market share of Sensodyne in Tier 1 cities versus Tier 2, Tier 3 is still low. So we're expanding our distribution and our footprint there.

Looking at India. India is a market that grew for us double digits the last number of years, double digits in Q1, super confident going forward in India. About 2 years ago now, we built our own -- began building our own sales force initially when GSK Consumer Health sold Horlicks to Hindustan Unilever. Hindustan Unilever was the distribution arm for that business. We decided strategically, it was time for us to take control of that.

At the same time, we've launched low-income products to reach a different consumer cohort, specifically Sensodyne INR 20 pack. We already have a INR 10 pack on ENO. So we see huge opportunity there. We are investing heavily already. So we're investing in A&P. We're investing in the infrastructure, in the people but we are seeing the returns come because the growth is really, really strong. And our gross margins even on the INR 10 pack of ENO are quite strong.

So I would say that, listen, we are investing in things. It's part of our algorithm going forward. We expect emerging markets to be in that high single-digit kind of range on a continuous basis. Last year, the numbers are a bit hard to dissect because there was just a -- there was a cold and flu impact across both developed and emerging markets. But we feel like we have a really strong business, really strong share growth in emerging markets and quite optimistic about where we can take it.

Okay. Great. So maybe if we look at the EMEA and LatAm business now, this obviously had a tough start to the year because of cold and flu. But what was the performance outside of the seasonal product like? And do you see any impacts of the Gulf conflict either, I guess, here or anywhere else?

Yes. And it's worth Europe, Middle East, Africa, LatAm. By the way, when I changed the operating model of the business, we created Europe as a stand-alone operating unit in Latin America and Middle East, Africa and India. So when we report half year results, you have visibility on Europe as an entity as opposed to EMEA and LatAm.

So let me take it in 3 chunks. So I'd say in Europe, I'd say the business has been stable in the sense that it hasn't been declining, hasn't been growing aggressively. We've been growing market share, impacted by cold and flu. So that's a lot of noise in a lot of the numbers. But we feel like it's a good market and we would expect that market to grow in the 2 kind of percent and we'd expect to be able to grow ahead of that. It's been more flat to slightly down, cold and flu in there and some things.

We don't think there's a big impact yet of the Middle East crisis on Europe at this point. It's certainly a tougher economic environment because we're going through pharmacies for a majority of our business and pharmacist recommendation to play such a big role. We feel like we're positioned okay in Europe to kind of withstand that situation. But we're not seeing it as a high-growth market and a big growth driver, but it's a very profitable market and it's quite challenging but stable for us.

If I look at Latin America, Latin America was tough for us in Q1. It is something we elevated to my leadership team. We brought a new leader in. We did that because we think there's significant opportunities in Latin America. We don't feel like we were capitalizing on them. I think we learned some things as the new leader came in, who's got tremendous Latin American and CPG experience. We've already made some changes. Q1 was quite challenging. Q2 is going to be much better, and we're quite optimistic going forward.

Middle East, Africa was one that was growing quite well for us, grew quite well in Q1. We are seeing just a direct impact quite in places like UAE. For perspective, Middle East is about 5% of our business. UAE is 25% of that chunk of business. So we are seeing some impact on it, but not particularly significant, but we're seeing a downturn in some of the consumption in markets like UAE.

Now from an overall impact of Middle East, Africa and the cost situation, we just feel like we're better positioned than most because we have high gross margins, quite low exposure to petroleum-based derivatives and raw materials and stuff like that. So we estimate it's about 3% of our cost base. But because the productivity is going so well, because gross margin is so strong, it gives us a lot of flexibility to continue to drive that high single-digit operating profit growth, deal with some of these cost headwinds that may come, but also make sure that we're investing in driving growth in R&D for the business and making sure we're showing share growth and we're strengthening our business even at a time where top line is a bit tougher than it has been in previous years.

Okay. Interesting. Thank you very much. So perhaps now we could spend a bit of time on North America. Firstly, how would you describe the consumer backdrop that you're seeing at the moment?

Yes. So again, what I would say is in Q1, we saw a negative market, cold and flu being a big impact. I know that continues to be a theme here, but it is the reality of what we saw. I'd say, again, that's a market we never expect to be super high growth, a couple of percent kind of thing, maybe a bit more flattish than a couple of percent kind of thing. So not massive in the categories that we're in kind of drag on growth at all. If I look at oral health, for instance, slightly less growth than we have expected, but our business actually performed as well, if not better, than we expected.

So our market share has actually been better than we thought. The launch of Clinical Repair in the U.S. and the accumulation of Clinical Enamel Strength is really just continuing to build momentum. So oral health grew -- Sensodyne grew double digits in Q1, quite strong. So we expect that strength to continue. Cold and flu is primarily a Q4, Q1 thing. It still is something that exists in Q2. So -- but it's less of a drag than it would be elsewhere.

So listen, I would say it's relatively stable. We're not seeing big declines. We're not seeing aggressive growth. So our focus is really on our commercial execution, growing market share. And with Nathalie and her team in the U.S., we have some wins in Q2. Changes happened kind of April into May and now in early June, it's probably all set, which is we saw some real wins in distribution in places like Walmart, with Sensodyne, with Oral Health, with Advil, Centrum moving up to a middle shelf from the bottom shelf, wins in Target and in Costco.

So we know that we have some good wins that will help us be even more competitive in that market. We grew 1% in Q1. We expect to see better growth in Q2 and expect to see a progression throughout the year.

Okay. Thank you. And perhaps we could spend a bit of time talking about the different channels and some of the channel shift as well. I mean, firstly, we have the destocking within the drug channel. Is that over? And are you annualizing that? And is that like less of a drag?

Yes. Listen, what I would say is 2 things. So the channel shift where the drug channel is not really growing and Walmart, Amazon, Costco tend to be the big winners. That shift is something that's been happening for a while. The difference was last year, I think as the drug channel customers were under real pressure to deliver their financial results, they took their inventory levels down from a week's perspective.

We believe that's behind us because actually, we're at a level now where it will result in out of stocks and it will impact top line sales, and we think that's done. The channel shift will continue to happen. But listen, as the drug channel becomes a smaller part of the business, Amazon, Walmart has, they will also need more inventory to support growth.

So we think that's just very manageable. And so as far as the step change in inventory that was being hold by the drug channel, we believe that's behind us. The channel shift will continue. And then we look at something like Amazon, 18 brands make up about 90% of our sales on Amazon. 16 of those 18 brands, we have higher shares on Amazon than we do in bricks and mortar.

So Sensodyne, for instance, has about 6 share points higher share online than offline. So from that sense, the channel shift is going to channels where we have higher shares and we're even more competitive.

Okay. So we're hearing a lot about Agentic AI at this conference. How much are you seeing it on the retailer side at the moment that in price negotiations with the larger buyers? And how important is it on the product discovery side?

Yes. I mean, listen, we're doing -- I'll start with the product discovery side. We're doing a lot of work because, obviously, large language models, Agentic AI pulls from different sources than like a regular search. The other thing is that the logic by which decisions are made by the large language models are different than the way it would be for consumers. So how you present data, how you put data in there and how that works is something that you need to be very conscious of.

So we're on that, and we're working that. We don't think that's something that's had a significant impact on the business yet, but we're prepared for the fact that, that will become a bigger, bigger part of Agentic shopping potentially in the future. We have tremendous amount of product data, clinical studies, claim studies, consumer research, even on our oral health portfolio, where we have a significant amount of clinical studies and things like that.

Internally in the company, that was all digitized. Now that all sits within a large language model that allows us to get answers on can we make X claim on this product in this market? What would take months of regulatory people shifting through things is now a couple of minutes coming back.

We believe that in this future world, having great data on your products is an advantage versus not being advantaged in a world of Agentic shopping, just the way the large language models work because we have data that show the efficacy of the products, data that show superiority and things like that. So it's a work in progress. I think everyone is figuring it out. We're on it. We believe it's something that could be much bigger. And we believe that given our portfolio and given all the data we have and all the clinicals, this should be something that shouldn't be a headwind for us. It's something that we should be able to navigate pretty well and maybe be an advantage.

On the customer side, listen, I don't price negotiations are always difficult with customers. We're not looking to take pricing at this point kind of thing. So we haven't really seen as much, I think, on that side, at least to date.

Okay. So if we put all this together, you previously stated that once you annualize some of the smokers health headwinds and the destocking on drug channel as well as having the shelf resets, et cetera, as you'd outlined, this would lead to accelerating growth in the U.S. How are you feeling about that and the level of growth that you can get to?

Yes. Listen, I think, 1% growth in Q1, Q2 will be better. I think you'll see progression throughout the year as some of these things get embedded, the new operating model gets embedded, the new team in the U.S. gets embedded. I see the U.S. as a business that should grow 3% to 4% plus on a consistent basis going forward. That's kind of where we would expect to be as we go into 2027 on the kind of growth. Can it be 4%? Can it be higher? I mean that's to be clear, our ambition is to really maximize that business. We feel like we have a great portfolio. I feel like we have a new team in place that's on it and is going to bring a whole different level of capability. So I feel good about the progression in the U.S., but it will be something that kind of work throughout the year.

Okay. So perhaps we can move on to the cost side of the business and the productivity that you mentioned before. So you've announced GBP 800 million in cost savings by 2030. These were grouped into immediate accelerators, operational excellence and build for tomorrow. Do the immediate accelerators contribute incrementally both to '26 and '27 in terms of cost savings? And what's the line of sight that you have on these for next year in particular?

Yes. So again, we announced GBP 800 million, and we said 50 basis points to 80 basis points of gross margin improvement over the next 5 years. What we saw in 2025 was 220 basis points of gross margin improvement. And honestly, as you model kind of gross margin improvement and you simplify the portfolio and things like that, I always believe there's so much more there, but it's hard to -- so as we simplify the portfolio, 26% less SKUs, 22% less packaging, 12% less formulations.

The operational efficiency of our plants went through the roof. And it just -- the net savings were tremendous, and that drove the gross margin improvement. That 220 basis points is not an accelerator, meaning that 50 basis points to 80 basis points won't be 50 basis points to 80 basis points going forward. We're quite confident in the 50 basis points to 80 basis points going forward because we'll still see benefits from those immediate accelerators, but we're already on the second tranche, which is automation in the plant, capital investment in our plants to automate more, to create more efficiencies. That's already in train.

And then the third, which is really about our supply footprint, which is more in-housing manufacturing. We're like 60-40 in-house and CMOs. We announced a plant in Shanghai in about a week or so, we're going to announce another investment in another plant in an emerging market. And those are things that in the 2- to 3-year time frame will start paying dividends for us.

So we feel really good about what we laid out, the GBP 800 million, saw more benefit in year 1 than we thought, seeing good momentum coming into year 2. And again, back to the answers to the first question you said, that gives us a tremendous amount of flexibility to invest in growth, to deal with potential cost headwinds that come from oil prices staying high, to make sure that we're doing everything to keep the business really healthy and drop high single-digit operating profit growth which will then cascade to EPS. We believe that's a great formula for us to drive real shareholder value at a time where everyone is facing a bit of growth headwinds.

Okay. Thank you. So you mentioned one of the interesting differences to your peers that you have a higher level of contract manufacturing, although you're looking to change that in the future. But I believe these prices are largely fixed for '26. So when we consider the COGS inflation, is that really for you more a '27 issue rather than '26? And is pricing something you're actually considering you mentioned it before that price is something you're considering?

Listen, I think I would say pricing is -- and certainly in the U.S. environment is the last quarter of call where we're going to go. By the way, we did take pricing in Q4 of 2025 on our oral health portfolio. And what I can say is the business is performing extremely well. We felt like the strength of that brand and the innovation that we have will enable us to do that. We're still driving great volume growth and great overall growth on that business. So we've done that already.

We're not looking for more pricing in the U.S. environment. We always take a couple -- 1% or 2% of price would be a typical thing you would do in Europe and other places. We're being very conscious about not getting to a place where we outprice our consumers. We don't feel like we have major pricing issues in places, maybe a bit of a brand combination here. If we need to invest in pricing, we will also because growth is the priority, and we want to make sure that we get to a place where we can be delivering that medium-term 4% to 6% growth on a regular basis.

So the CMO factor or just overall on the cost structure, all that plays into how we're looking at this year and how we're looking at next year. And again, we feel like that the situation is navigatable for us, and we're probably better positioned than most just because we have higher gross margins to start with. We have a productivity program that's kind of hitting on all cylinders, and we're a bit less exposed to commodity-related costs, certainly petroleum-based raw materials.

Okay. Very clear. So looking now at A&P, when you look at the returns that you're making on A&P, are you happy this is generating, in particular, the incremental growth that you expect from it? And how are you optimizing that spend? And where could you get to as a proportion of sales?

Listen, we're at about 28% A&P as a percent of sales. So we think we're well invested in the business. If you look at where over the last few years, a lot of that incremental A&P has gone because we've grown our percentage of A&P. It's been put like oral health. We've invested a lot more in oral health, and that has paid dividends. Emerging markets, places like India and now places like China, and we believe that we'll get really good returns there, launching things like Pronamel in India and parodontax in China, and these are places we're investing that incremental money.

I think we're very focused on growth. We think those places where we are investing the incremental A&P is translating into more growth. On the balance of the portfolio, we want to see more growth, and we're focused on it, and we think we'll get there.

The other measure for A&P, though, when you have a market which is the market growth isn't quite that way as it's due to cold and flu or other situations is share growth. And that's where I do feel good. And for me, that's an indication that our investment is working because the competitiveness of the business is strengthening. And for me, that's a long-term thing that higher market shares, growing market shares in our business getting momentum. Cold and flu is going to grow off of a 2-year lower base. The stronger we are going into when the markets get a little more buoyant, the better off we are.

Okay. So if you look at the cadence of innovation that you've had as a company, we've seen consistent value-creating innovation coming out of oral health as you've spoken about. Are you happy that the innovation is coming through in the rest of the business at the pace that you'd like? And what are the innovation areas you're most excited about?

Yes. So listen, I think -- not to talk the oral health story, you captured it. Yes, we're very happy as well. It's also a very different category than OTC and what the drivers of those categories are. So when I talk OTC, think pain relief, respiratory health, skin health, a bit of digestive health.

The innovation cycle is different because the approval cycle is very different because especially if you think about across Europe and many countries, it's almost like individual approvals need to happen. So just to give you a sense of the history of what happens. We launched Voltaren 2% for the first time in 2008 in Portugal. Last market was Saudi Arabia 2018, not because we're not good and we don't know how to do it. It's the nature of the business.

So the OTC portfolio has less of a fast innovation cycle and commercial execution and pharmacist recommendation plays a bigger role than it would, let's say, in other categories. That said, we think we can do better on innovation in OTC. We're very focused on it. A number of things that are being rolled out as we speak. We've talked about our Ultra Nasal Mist, which we're rolling out and has done extremely well. We launched Advil Dual Action in the U.S., which is a combination ibuprofen, acetaminophen kind of pain reliever that is more effective with less dose.

We're launching that around the world under the Panadol brand because we don't have Advil everywhere else around the world. On Voltaren, we have 24-hour patches that we're launching. The patch market is very robust. The challenge with the innovation is it tends to be a bit over time and not quite the big bang where you launch clinical white and boom, you see the clinical white and how it impacts it.

That said, that OTC business is tremendous because with that innovation cycle comes major barriers to entry and a regulatory moat around it, commercial excellence, pharmacist recommendation plays a big role. We're the #1 pharmacy sales force in the world. So it's a fantastic business, less A&P intensive than some other businesses.

So I think it plays a really important role. New Head of R&D joined us in August. We are very focused on how do we -- despite all of those challenges, how do we create a different pace of innovation in OTC. We don't see anyone else doing that. We think we're positioned to really accelerate that. So it's a big focus for us.

And then VMS is a faster pace of innovation. We're launching Age Defy in the U.S. under Centrum. We've launched a GLP-1 variant under Centrum in the U.S. We've launched -- done extremely well in China, personalized daily kits, which are based on interviews or questionnaire with consumers, super premium product that gives you a packet of customized vitamins you take in a given day. That's more premium. So we think we -- but we also feel like we can do better in VMS innovation and that's another big focus.

Okay. So perhaps linked to this is your capital allocation. You've been focused on executing growth, particularly in the power brands. But we've seen high growth in areas like hydration and other VMS categories with significant growth in either adjacent categories, I suppose, or in disruptors. Do you believe that M&A plays an important part in value creation? And what's your view on acquiring smaller growth brands versus much larger cost synergistic M&A?

I think, first of all, capital allocation priorities, invest in growth, bolt-on M&A, return excess cash to shareholders. Bolt-on M&A is a big focus. And Tom, we do feel like there's some higher growth areas, specifically in what I'd call wellness, which as we think about wellness is it's like the overlap of digestive health and VMS, right? The wellness, the more proactively managing health. We think there are faster growth areas we want to shift the portfolio into. We think it plays a big role in value creation up until in our first couple of years, we didn't really have the flexibility to that because we had high leverage.

We needed to do some divestments. We needed to get to a place where we have the strategic flexibility to do that. We have that now. It's a big focus for me. And again, it's not about, hey, we need to do a bunch of stuff to get us to our medium-term guidance. But I think we have an opportunity to get us to a place where we can be even more confident in the mid- to higher end of that range that we can shift the portfolio. Some is also about divesting a few things which are lower growth areas that we think we can move on from.

But we also want to do that as we bring in some higher growth things because we do want to manage the dilution. We did 3 divestments in the first couple of years of the business, strategically made sense. It got rid of lower growth areas, simplified the portfolio, helped us pay down debt, which was really important, but they were also a drag to our operating margin, and it was dilutive in some areas. And we want to manage that better as we go forward. But big focus on bolt-on M&A and taking the opportunity to get into higher growth areas.

I guess to sort of flesh that out a little bit, do you want to move into more adjacent categories where there's, if you like, more of a daily use aspect, more sort of CPG aspect to growth versus, say, less frequent but important consumer health aspect?

Yes. I think, listen, what I would say is we want to be in consumer health. I think there are subcategories in that kind of wellness subset I talked about that are more daily use products. If you think about performance products or gut health and things like that. So we definitely want to get more into that, shift the portfolio even more into proactive management of health. Obviously, our oral health business is a daily use category, and we've kind of proven we know how to run that category, and we're very good at it.

So I see the shift, but I still see us being in consumer health. So I don't know what you meant by adjacencies, but I don't see getting into completely other categories that are outside of the health space. We think there's plenty of opportunity on where we play. And by the way, that both we talked about wellness and that. It also goes into opportunities in higher-growth markets. So there's a portfolio piece and there's a market piece. India would be a priority for us also in bolt-on M&A because we have a great business there. It's growing well. We've got great capabilities. We think we can leverage that and continue to strengthen the portfolio.

Okay. Well, thank you, Brian. We've come towards the end of the session. But before we finish, would you like to sum up the current outlook for us and for the company as we look into the second half of this year?

Yes. Listen, we guided to 3% to 5% this year. That is below our medium-term guidance. We did that because we knew we had headwinds in cold and flu, and we knew we were heading into a tougher market. We continue to be confident in that 3% to 5% growth on the year. We believe the back half will continue to strengthen as we go. We are very confident within that to deliver that high single-digit operating profit growth linked to all the productivity things that we said. I feel like the changes in the operating model that we're doing, the new structure of the company, the teams will give us more capacity even going forward to invest in capabilities in AI and Agentic AI and in technology and help set us up for 2027 beyond to get back to that medium-term guidance and growth algorithm.

And this year, my objective is let's drive growth, let's become more competitive, let's drive share growth and let's enter next year with momentum so we can deliver that.

Well, Brian, thank you very much indeed for your answers today. Thank you for your perspective, and thank you very much indeed, everybody, for joining us. Brian, thank you very, very much.

Appreciate it.

Thank you.

Good morning. Welcome to today's Haleon's first quarter trading update. My name is Sarah, and I'll be your moderator today. [Operator Instructions]. I would like to pass the conference over to our host, Joe Russell, Head of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to Haleon's conference call for our first quarter trading statement. I am Joe Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer.

Just to remind listeners on the call that in the discussion today, the company may make certain forward-looking statements, including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. Today, we'll focus on organic revenue performance. There is a full reconciliation of organic revenue in the appendix of the company's slide presentation.

Following Brian and Dawn's remarks, we will take your questions. And for those listening to our webcast, who would like to ask a question, you can find the details on Page 3 of today's press release.

And with that, I'll hand over to Brian.

Thanks, Joe, and welcome to our Q1 2026 results call. We've navigated a challenging market in the first quarter where consumer confidence continued to weaken and delivered 2.2% organic revenue growth. The continued weakness in cold and flu that we highlighted at full year impacted group organic growth by 130 basis points. Once again, Oral Health performed strongly with innovation-led premiumization and geographic expansion driving continued success in Sensodyne and parodontax. And in VMS, Centrum saw an improved performance, underpinned by innovation. We continue to make progress against our strategic priorities.

Our productivity initiatives continue to drive strong gross margin improvement. Consistent with our strategy to build more competitive consumer-focused supply chains, in March, we announced GBP 65 million investment in a new oral health facility in Shanghai. That's due to open in early 2028.

And on culture, we are moving forward on the operating model changes we set out in January, which are designed to drive growth and agility. Coming back to growth. Dawn will take you through the numbers, but first, I'd like to look at North America, which is a good example of how our growth initiatives are progressing well.

Over the past quarters, we've been very deliberate in strengthening both our marketing effectiveness and our in-market execution. And while we have reorganized the team to follow our category-led approach, we have also created a cross-category platform team to capture opportunities that sit across the portfolio. A good example of this is GLP-1. We are taking a holistic view of consumer needs. This is not a single category opportunity. It spans VMS, digestive health, pain relief and oral health, and we are aligning our brands to play across that full consumer journey.

In parallel, we are accelerating innovation and sharpening how we segment our brands to address consumer needs. The recent launch of Centrum Age Defy is a good example, allowing us to reach a younger consumer with a more tailored proposition alongside innovations such as Excedrin Rapid Relief, bringing faster-acting solutions to the market in a category where speed of relief matters. Taken together, these actions are starting to translate into performance. In Q1, North America returned to growth, up 1% overall.

Next, let's look at our emerging markets, where we delivered organic revenue growth of 4.3%. That was largely due to weak cold and flu season in Central and Eastern Europe and Asia Pacific. Latin America and particularly Brazil also continued to be impacted by challenging consumer backdrop and performance challenges with higher promotional activity. We put in place a number of programs to support growth in Latin America, which we expect to positively impact performance from Q2 onwards. Examples include the launch of accessibility offerings across Sensodyne and Denture Care along with activations we are planning around the FIFA World Cup for ENO. Despite the near-term headwinds, we remain confident in our emerging markets. We have strong brands, our innovation pipeline, along with the actions we're taking to strengthen distribution will allow us to reach more consumers.

Turning now to the outlook. As we talked in February, outside of respiratory, we are not assuming a material improvement in global category growth. Despite the macroeconomic and consumer backdrop becoming more uncertain in recent weeks, we are maintaining our outlook for the year, but much will depend on the duration of the current conflict and any potential impact on the wider economies of our key markets.

So we expect organic revenue growth to be between 3% and 5% for the full year. We will deliver improving growth momentum through the improved performance in North America that I've talked about, increased investment in our e-comm channel in China, particularly Douyin, and an improvement in Latin America from some of the actions I outlined earlier.

On profitability, our plans are on track, and we remain confident in strong gross margin expansion. That improvement will be supported by ongoing productivity initiatives, delivering high single-digit operating growth while allowing for continued healthy investment in the business.

I'll now hand over to Dawn to take you through the numbers in more detail.

Thank you, Brian. Good morning, everyone. As expected, it has been a challenging start to the year. Category softness has continued where consumer confidence remains under pressure with our results also impacted by weak cold and flu season. From a consumer perspective, penetration levels across our categories continue to be resilient, but consumers are becoming more value-orientated and seeking more convenience. Against this backdrop, we delivered 2.2% organic revenue growth in the quarter, 2.4% from price and a decline of 0.2% in volume mix.

Looking at the results in more detail, starting with our global categories. Oral Health continued its strong momentum, delivering 8.3% growth, 2x ahead of the market. Key highlights were, in the U.S., growth was driven by the innovation rollout of Sensodyne Clinical Repair, along with parodontax Gum Strengthen & Protect. This resulted in double-digit consumption growth with Haleon growing 4x the market.

In India, our INR 20 Sensodyne pack performed well with 70% of units being purchased by new consumers to the brand. And overall, our growth was balanced across price and volume mix. For VMS, we saw an improving trend at 1.7% organic revenue growth. This was largely driven by Centrum. And in particular, North America grew mid-single digit. This was due to the launch of Centrum Nutrient Replenish targeting GLP-1 users, alongside continued strength in Centrum Silver, helped by the activation of biological aging claims.

And in Asia Pacific, the upgraded daily kits in China also performed well. On Caltrate, while consumption remained healthy, organic revenue growth was impacted by a tough comparative in the prior year.

In OTC, we saw a mixed performance with strength on brands such as Panadol, Benefiber and Tums, offset by a weak cold and flu season as well as declines across Smokers Health and Nexium.

Within the pain category, revenue was broadly flat. Key highlights were Panadol maintaining strong momentum, driven by our new campaign 'That's One for Panadol' and an improving trend in Voltaren, driven by the rollout of our 2% formulation in India and Saudi Arabia following the success in China and continued share gains in Advil in the U.S., driven by the 'No Pain. More Gain' activation against a weak category.

Within Respiratory, organic revenue declined 3.4%. Around 60% of our portfolio is positioned against the cold and flu category, which was down in Central Eastern Europe and showed double-digit decline in North America and Asia Pac. And in addition, Smokers Health continued to be a drag, declining double digit in the quarter. These factors more than offset strong performances from improved in-store execution and expert endorsement in Flonase as well as continued strong performance and expansion on Otrivin Nasal Mist.

For digestive health, strong innovation and activations on Benefiber and Tums was offset by weakness in Nexium and ENO to deliver 0.4% organic revenue decline.

And finally, Therapeutic Skin Health and Other grew 3% with continued strength in Bactroban, partly offset by a decline in Fenistil.

Turning now to the regions. As Brian mentioned, North America returned to growth of 1%, 3.7% from price and 2.7% decline in volume mix. In the quarter, we saw double-digit growth in Oral Health, alongside an improved performance on Centrum and continued strong performance across Tums, Benefiber and Flonase, offset by double-digit decline in cold and flu.

Moving forward, we are confident that growth in North America will accelerate as we move through the year. This will be underpinned by shelf resets, strong activations, including the partnership with U.S. Soccer for the 2026 FIFA World Cup as well as further innovation.

In EMEA and LatAm, we delivered 2.1% organic revenue growth with 2.6% from price and 0.5% decline in volume mix. We saw a very different picture across the 3 operating units. In Europe, we continue to see resilient performance with modest revenue growth underpinned by outperformance in pharmacy and mass market channels. This is against the backdrop of weaker consumption and lower consumer confidence. Strength in oral health, along with good growth in Panadol and an improving trend in Voltaren was partly offset by weak cold and flu season in Central and Eastern Europe.

In Middle East and Africa, we delivered high single-digit revenue growth with a good balance across price and volume mix, driven by innovation launches, including Panadol Dual Action and Voltaren 2%. Whilst performance in the quarter was not impacted by the Middle East conflict, we are monitoring the situation closely.

In Latin America, revenue was slightly up. The macro picture has been more challenging, and we have seen performance issues in Brazil.

In Asia Pacific, we delivered 4% growth with a higher-than-expected significant impact from the weak cold and flu season. In China, we continue to outperform and grew mid-single digit with double-digit growth in the e-commerce channel, which now makes up around 40% of our revenues. Our innovation agenda also continued to deliver with our upgraded Centrum daily kits with benefits for metabolism, liver and cardio performing well. We expect growth in China to accelerate as we build out further capabilities in Douyin through tripling the number of content pieces on the platform and doubling the number of key opinion leaders across VMS.

In India, we grew double digit with excellent in-market execution, particularly for Sensodyne Pronamel. As a result, Sensodyne grew at 5x the rate of the category with significant market share gains. In fact, Sensodyne has now reached double-digit market share in India.

Turning now to the remainder of the year. Our guidance remains unchanged at 3% to 5% organic revenue growth and high single-digit operating profit. We are watching carefully the potential impact from the conflict in the Middle East. And whilst we didn't see any significant impact in the quarter, we are mindful of potential changes in future consumer spending patterns and are monitoring costs in our supply chain closely.

So in summary, for quarter 1, Oral Health continued to outperform, North America returned to growth and we saw continued resilience of our portfolio against the backdrop of softer consumer markets. Our productivity agenda continues to make excellent progress. This provides us with the flexibility and agility to continue to invest and navigate the macro uncertainty.

With that, I'll hand back to the operator for the Q&A.

[Operator Instructions] Our first question is from Guillaume Delmas with UBS.

Two questions for me, please. First one, Brian, on your 2026 guidance because you had a relatively soft start to the year, I think, largely expected, maybe LatAm, China a little bit weaker than you anticipated. But more importantly, there is now far more macro uncertainty versus a couple of months ago. So my question here is you reiterated the 2026 outlook, but have some of the key moving parts changed? And do you see now clear additional sources of downside or maybe conversely upside, particularly when it comes to savings. So any color on how you look at the guidance now versus at the time of the full year results? What maybe you're baking in at this stage for the Middle East? And I guess what underpins your confidence in meeting your guidance?

And then my second question is on North America. I mean, it does seem category growth, even when we adjust for the weak cold and flu, not only is not improving, it seems category growth is getting worse, particularly in OTC in the region. So can you maybe talk about the reasons for this kind of unusually negative category growth? And do you see any structural reasons for that? Or is it just a bit cyclical and you would expect a pickup?

And very lastly, in the meantime, how do you ensure you keep outperforming category growth and that the gap between you and category growth keeps on widening?

Thanks, Guillaume. Let me start with full year guidance. So taking a step back, as you said, Q1 slightly lower than expected, but not material, honestly. So broadly in line, a little more downside in cold and flu in Asia Pac, specifically China. So from that perspective, nothing's changed since we guided.

As you mentioned, what has changed is the uncertain macro environment. Given the war, hard to predict what's going to happen, and we're monitoring it closely. But to be clear, there was no impact in Q1. Dawn mentioned that. Middle East, by the way, just for perspective, is about 5% of our overall business. So we do remain confident in the 3% to 5% guidance and in accelerating growth through the balance of the year. And that confidence comes from, first, North America. Benefiting from the shelf resets, which are happening at our largest customers, they're happening as we speak. So they're going into place now and into early May, our partnership with the U.S. Soccer and the activation that's going to happen across category initiatives on things like GLP-1 and frankly, just overall improved execution behind a very strong and new team in North America.

Secondly, we mentioned Latin America and Brazil. I mean, we did see a tough macroeconomic environment in Brazil. And our results were much softer there than they were in Q4. Now we've made a leadership change in Brazil. We've also made a structure change where that now sits on my executive team reporting directly to me. I was actually in Brazil 3 weeks ago with Andres, our new leader there. He has got fantastic, by the way, Latin American consumer experience.

I'm really confident in the plans we've already put in place, the actions we've taken to see improvement in Q2 and an acceleration in the back half. And then obviously, we're lapping softer comps in the back half in respiratory. And after 2 years of decline, we'd expect to see some growth off of that lower base.

And you mentioned it, Guillaume, I think on the profit side, productivity continues to progress ahead of our expectations, honestly. So the strength of the gross margin improvement gives us the flexibility we need to invest in growth, which underpins the confidence of being able to deliver the guidance on the top line despite a very difficult macro environment, but also the confidence in delivering the high single-digit operating profit growth with those uncertainties.

I mentioned a little bit, your second question was really on North America. Again, I was in North America a couple of weeks ago also. I'm really, really happy with the progress we've made there. The changes in distribution and shelving across Oral Health and Pain Relief and VMS are going to have a real impact on the business. So I'm confident we can continue to outperform and perform in the market. Cold and flu was down pretty significantly in Q1 in North America. And it has a little bit of a halo effect on some other categories, pain relief and immunity and VMS and things like that. But overall, again, I don't think that's a structural thing. I think it's a cyclical thing and that we would expect that, that to kind of bounce back. Where I am very confident is, obviously, in our ability to outperform and outperform more in the U.S. as we look at the balance of the year.

Our next question is from Warren Ackerman from Barclays.

Warren here at Barclays. Two for me as well. Can you maybe sort of drill in a little bit more on what you're seeing in Asia? I mean, you mentioned China, you expect acceleration with the Douyin rollout. I guess cough, cold, flu was quite weak in China. So maybe -- if you can maybe outline what the underlying picture is in China and then what you kind of see on the go forward? Similar thing on India. And in Southeast Asia, are you seeing any kind of weakness in some of the smaller Southeast Asian markets given the Middle East conflict. So yes, just any color on what you're seeing in those 3 big buckets of Asia?

And then secondly, just back on cough, cold and flu. I don't know whether Dawn, you're able to just break it out for us in terms of what the impact was specifically in the U.S., in EMEA, LatAm and in Asia Pac just so that we can sort of see what the underlying numbers are.

Great. Thanks, Warren. Let me take the first one, and then I'll pass it to Dawn on cold and flu and impact in the U.S. So first of all, in China, mid-single-digit growth in China. We have a brand in China called Contac, which is quite a big cold and flu brand, and we did not see a season at all. So that was a drag.

We have a good business on Douyin in China, but we see a bigger opportunity there. And that business for us, by the way, grew 100% in Q1. But remember, we have over GBP 1 billion business in China. And the other thing about Douyin is it isn't a channel where you can do OTC products based on regulatory. So it's really focused on our non-OTC portfolio. And we're quite confident in the acceleration that we're seeing and the capabilities we're building there. So we feel good about China.

India continues to be our star in seeing mid-double-digit growth. And frankly, Oral Health in China is doing incredibly well. The low-income consumer strategy we have there, the launch of Pronamel is driving very, very strong double-digit consumption growth.

And then on Southeast Asian markets, I mean, we're monitoring it closely. We haven't seen a big impact to date. It hasn't impacted Q1, but we're monitoring it closely because, obviously, we're seeing others -- in other categories seeing an impact in Southeast Asia. But overall, it seems to be fairly stable and continuing as is. Dawn, do you want to talk on cold and flu?

Yes. Thanks, Warren. So look, in terms of cough, cold and flu, so 130 basis points in the quarter. And the way I think about that, I mean, if you think about the majority of that is volume. And if I compare it to Q4, where we had 150 basis points impact, so kind of broadly similar overall, but actually, the split across the 3 regions is quite different. So a much bigger impact in terms of North America and Asia Pac, both of those down double digit.

And as I said, the way to think about that is from a volume perspective. So North America, if you think about volume down overall 2.7%, actually most of that cough, cold and flu. And I think the same in Asia Pac. So the reason why Asia Pac is at 4%, as I said, big drag from cough, cold and flu. I think in EMEA, LatAm, whilst we saw an impact in Central Europe, we didn't see really a large impact from cough, cold and flu in LatAm.

The other 2 things to talk about, if you look at overall respiratory, remember in respiratory, we have 3 parts. We have cough, cold and flu. We have allergy in terms of Otrivin and Flonase, which were both very strong in the quarter. And we also, obviously, in the U.S. have Smokers Health. So I think when you think about respiratory, you need to break it down into the 3 parts.

The last thing I would say, I mean, look, over the last 2 years, we've seen 2 weak seasons on cough, cold and flu, particularly overall in North America. And if I think -- cough, cold and flu volumes are down over that time, mid- to high single digit. It's not unheard of to have 2 weak seasons, but it is quite rare. So everything else being equal, if we look forward, we are expecting to see improvement in cough, cold and flu in terms of volume growth, particularly in the back half of the year.

Our next question is from Olivier Nicolai from Goldman Sachs.

Two questions, please. First of all, Q1, you saw a double-digit decline in Smokers Health, Nexium also continued to decline. What is the strategy to get these brands back to growth? And would you also consider some portfolio adjustments, which would probably help you to reach your 4% to 6% midterm targets more easily without those drugs?

And then secondly, just more of a follow-up on previous comments from you, Brian. But if you look at the Q1 growth, it was 3.5% once you adjust for the cold and flu impact of 130 bps. Do you expect an acceleration from that level? And could you remind us where this acceleration will come from in terms of regions and categories in the coming quarters?

Great. Let me take the first question, Olivier, and then I'll pass it to Dawn for the second question. Listen, no question, smoking category has been a challenge. As we said, it was down double digits in Q1. Overall, the category is down mid- to high single digits. So actually, there's a category issue there. But there also, as I said in the past, there's a share challenge with private label. And remember, these products are in the $30 to $40 range and with the U.S. consumer being under pressure. That said, we are very focused on stabilizing this business, and we're taking actions, increasing promotions to close price gaps to private label, incremental A&P investment. We're putting all those things in place.

There are some green shoots. To be clear, we're seeing very good growth in Walmart and Amazon on the gum variant. We're doubling down in those areas to make sure that we can drive more success where we're having success. So obviously, it's a priority for us to stabilize as we move forward, and we have plans in place to do that.

Your question on portfolio adjustment, of course, if there is an opportunity for us to strengthen the portfolio by bringing in higher growth assets and potentially divesting assets which aren't as core or strategic, we're absolutely open to that, and we're actively looking at opportunities there. Why don't I pass it over to Dawn.

Yes. Thanks for the question. I mean when I think about the building blocks for the year, I would expect sequential improvement in growth as we move through the year. And you will have seen we've held our guidance full year between 3% and 5% organic revenue growth. The way I see the moving parts, obviously, Brian has talked about North America. It's great that North America is back in growth, 1% growth. We feel really confident in terms of continued improvement in that growth rate, whether it's from shelf resets, strong activation and the rollout of innovation. And we have put more investment in North America as well.

If I look at Asia Pac, we also -- Brian also talked about China in particular. So India continued double-digit growth. I talked on the call about the strength in Oral Health and excellent execution. So we expect that to continue and mid-single-digit growth from China.

Again, we're also increasing investment, a very strong performance on e-commerce and further investment going in Douyin. And also, even if I look at markets like Australia, very strong activation in terms of Panadol campaign, That's One for Panadol. So I think Asia Pac, obviously, Q1 impacted by cough, cold and flu. But I think the underlying performance and the key drivers remain intact in terms of strong performance moving forward.

If I look at Europe, Middle East, Africa and Latin America, let me break it down into the 3 parts because Europe, actually, it's a challenging backdrop in terms of category and consumer. But within that, our performance remains resilient actually, particularly given our strength in pharmacy channel, and I would expect that to continue.

If I look at LatAm, a softer macro backdrop, stronger promotions in Q1. And so I would expect that to improve as we move through the year. Brian talked about Andres, new leadership in there. We feel good about that improvement. And in terms of Middle East and Africa, actually a big shout out to our commercial and supply teams that we did not see an impact in Q1. And actually, Q1 at high single-digit growth in Middle East, Africa is very strong.

I would say in Q2, we have started to see an impact, particularly in terms of consumption, and we are watching that closely. So Middle East probably is the area that remains uncertain. I think the other thing to talk about in that whilst we haven't seen an impact in Southeast Asia, obviously, it is an area that we are also monitoring closely, particularly given higher fuel prices, work from home, et cetera. So as I said, holding guidance, 3% to 5% growth, organic revenue growth for the year and sequential improvement in growth as we move through the year based on the different moving parts that I've talked about.

Our next question is from Sarah Simon with Morgan Stanley.

Most of my questions have been answered, but just one. Can you give us the weighting of cold and flu revenue through the quarters? That would be helpful.

Yes, I could take that very quickly. It's roughly 1/3 in Q1, about 15% in Q2 and then about split almost evenly Q3, Q4, about 30% each, rough numbers.

Our next question is from Celine Pannuti with JPMorgan.

My question on North America. So clearly, a pleasing start, 1% growth. Pricing was very strong. Is that kind of level to be sustained? Or was there maybe less promo because of the weak cold and flu? And what kind of pricing are we expecting for the year? I mean Q2 is your easiest comparative in North America. Are we expecting a strong bounce back given what you said on the shelf reset. And are you still comfortable with the 2% for North America for the year? Or you think maybe it could be higher. I don't know, pricing to me seems to be quite a tailwind. So if you could comment on that.

And then my second one is on Europe, which clearly seems to have a bit more challenges in terms of the different moving parts that you mentioned, including the Middle East. You flagged that for Q2. Does that -- obviously, we can't predict what could happen maybe on the second half, but like how comfortable are you that Europe is picking up in the second half of the year? And I presume maybe just to finalize on the point you mentioned on outlook, you said sequential acceleration. Are we expecting Q2 to be within the 3% to 5%?

Okay. Thank you, Celine. Listen, I'll take the second one on Europe. And I think you're probably talking Europe, Middle East, Africa, Latin America in that context it sounded like. And then I'll pass it to Dawn for the North America question and maybe the guidance -- phasing guidance question.

So listen, overall, in Middle East, listen, it's 5% of our business, not a massive piece of our business, it's 5%. We are seeing consumption softness in a few countries there. No question. We don't know how long the conflict is going to last or what the ultimate impact is going to be on that side of it. As we said earlier, as we're looking at all the input costs and the potential impact of a longer conflict there from an oil price perspective, obviously, we feel very good about the productivity programs we have in place. And again, they're exceeding our expectations and gross margin continues to show really strong progress. So we feel like we have a lot of flexibility to deal with that. And frankly, we're better positioned than most just because we have high gross margins and lower exposure to those input costs. So I think that's the Middle East piece.

On Europe, I think Dawn mentioned it earlier, too, which is, we're a pharmacy-driven market there. So we're seeing probably less of the impact that maybe others have seen in a more mass market driven. Now our toothpaste business is primarily in mass market, but I have to say it continues to perform extremely well, and we're up behind all the innovation and everything we've been driving there.

Dawn, do you want to address the North America one?

Yes. I think in North America, look, as we move through the year, we'd expect to see a more balanced price volume mix split. I think in Q1, I talked about the drag on volume from cough, cold and flu. And obviously, that will come out as we move through the year. I think from a pricing perspective, I mean, the price at 3.7%, that includes some carryover, particularly in Canada. And I wouldn't expect that level of pricing moving forward to the future quarters. So as I said, I think for North America, more balanced price volume mix. We've always talked in North America about the 2 main factors. One is our speed of improvement in terms of execution and the other one is in terms of the category.

And I think what -- I think from an execution point of view and what we're seeing in the first quarter, actually, we're seeing real positive momentum, and we're really pleased actually with the progress in North America. Obviously, what's also come up on the call is the category remains still challenging. But actually, our outperformance versus the category is improving in North America. When I look at the kind of phasing in terms of quarters, obviously, we're not going to guide to specific quarters. But as I said, we expect sequential improvement in growth as we move through the year.

Our next question is from Nicolas Ceron with Bank of America.

Just, Dawn, coming back on your comment on the cold and flu season. If we have a normal cold and flu season this year, what kind of growth rate you would expect in H2? Is that some sort of mid-single digit or double digit?

And the second question on LaTam, if I may. You expect an acceleration in Q2. Do you think you have some sell-in benefit in that? Or is that all consumer-driven?

Yes. I think, look, on cough, cold and flu, I mean, I've already talked about this. If you look over the last 2 years where we've had 2 weak seasons, cough, cold and flu volumes have been down mid- to high single digits. And we would expect -- therefore, we would expect to see volume growth in the back half of the year.

I think in terms of LatAm, it is a challenging macro environment, but we feel really good about the activations that we've got in place, both in terms of Oral Health and in terms of ENO. So we are expecting improvement in the LatAm performance as we move through the year.

So no sell-in benefit in LatAm, all consumer driven.

Yes, all consumer-driven.

Our next question is from David Hayes with Jefferies.

I'm going to be cheeky and do a follow-on then two questions, if I can. So just on the follow-up on the Middle East, you talked about some indications in the last few weeks of impact. But some companies have called out sort of 50% down in March. I'm just trying to get a sense of is it that kind of quantum that is the risk? Or is it much less pronounced than that in terms of what you've seen at the moment?

And then my two questions are just on the price-led growth versus the volume performance still coming through. Is there a need, you think, to review the price points across all markets, particularly maybe LatAm, to your point earlier on the competitiveness and to apply some more competitiveness in pricing into the second half, maybe take that down and reinvest even more of the ongoing cost saving that you're achieving.

And then the second one on input cost outlook for the second half. Some of your peers have sort of said if oil, et cetera, stay as they are, they kind of give a bit of indication on additional headwind. Is there anything you can give us on that in terms of the dynamics for the second half on cost effects?

Thanks, David. Let me address a couple of things and pass it to Dawn, and you can talk to input costs and the headwinds and stuff. First of all, Middle East, Africa, we are seeing consumption down like double digit, but like below teens. So to give you a range, we're not seeing 50% for sure, but we're seeing softness in the business, and that's why we wanted to call that out. Listen, on pricing and price gaps, we are focused on driving growth. So if the opportunities exist for us to tweak pricing, to tweak price gaps, we're going to do that, and we're going to make that happen. And just a bit of a case study, I was in Brazil a few weeks back, and we have adjusted some of our price gaps for some key competitors in markets where maybe they got a little out of whack, and we saw almost an instantaneous kind of volume growth. So we're on top of that.

I don't see major pricing reset or anything like that, but where there's opportunities to tweak and make sure we're doing it. And because the gross margin savings improvement is so strong, we have the flexibility to do what we need to do to get the business where we want it from a growth perspective. Dawn, do you want to talk?

Yes. I think, look, in terms of input costs, I mean, we are really well placed because we've got a strong supply chain productivity program that is progressing really well. In terms of our exposure, so if you think about our cost base, that's exposed to crude, it's about 3% of our revenue. If I look across total commodities, including gums, vitamins, that's around 10%.

We have fixed price contracts and hedging in most areas until the end of the year. What we have seen in the first quarter, we've started to see the impact. We started to see surcharges on freight, quite small, but I would expect that to increase in the second quarter and also in the second half of the year. But as I said, I think we're really well placed in terms of the strength of our productivity program, and that's why we've maintained our guidance, full year, of a high single-digit operating profit growth.

Thank you. There are no questions waiting at this time. So I'll turn the conference back over to Brian McNamara for any further remarks.

Thanks, everyone. I appreciate you all joining us today. Look forward to catching up with all of you in upcoming meetings and roadshows. And please feel free, as you always do, to reach out to the IR team if you have any further questions. Thanks for the continued interest and support in Haleon. Have a good day.

Thank you. That concludes Haleon's first quarter trading update. Thank you for your participation. You may now disconnect your lines.

Good morning. Thank you for attending today's Haleon's Fiscal Year 2025 Results question-and-answer. My name is Sarah, and I'll be your moderator today. [Operator Instructions] I would like to pass the conference over to our host, Jo Russell. Please go ahead.

Good morning, everyone, and welcome to Haleon's Full Year 2025 Results Q&A Conference Call. I'm Jo Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer.

Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements, including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed or implied by such forward-looking statements.

We have posted today's presentation on the website this morning, along with a video running through the results in detail. So hopefully, you've all had a chance to see that ahead of this call.

And with that, let's open the call for Q&A, and I'll hand back to the operator.

[Operator Instructions] Our first question is from Guillaume Delmas with UBS.

So one question. So my one question is on your organic sales growth guidance of 3% to 5% for 2026. I mean it does seem to signal some sequential acceleration relative to the 3% you posted last year. So wondering what will be the main drivers behind this sequential improvement? I mean, is it predicated on category growth accelerating and/or your level of outperformance gaining further momentum? And then related to this, Brian, you reiterated your medium-term ambition of 4% to 6%. I guess what underpins your confidence in the 4% to 6% when you may be delivering an organic sales growth below the bottom end of that range for now 2 consecutive years?

Thanks, Guillaume. I appreciate the question. So maybe let me take the 3% to 5% guidance, and I'll go to medium-term view. So if you take a step back and let's look at 2025, we grew 3%. That clearly was below what we were expecting when we were at Q3 based on the cold and flu season. But the U.S. was down about 0.5%. APAC and EMEA, LatAm grew mid-single digits. Now we did experience a market slowdown. A vast majority of that was obviously what we've talked about in the U.S. market and then the cold and flu category, which I mentioned.

Now remember, 70% of our cold and flu business is also outside the U.S. So in that context, we did deliver competitive performance. We outgrew the market overall and 60% of the business gained and maintained share. Looking at 2026, we're not planning on material improvement in the market. Consumers are likely to stay cautious. We're absolutely focused on driving category growth. I'm confident we will continue and improve on our competitiveness. And that's through investment in A&P, strong innovation plan, sharper commercial execution behind our new operating model.

And listen, the U.S. will return to growth in 2026. And that's based on the progress we've had to date. We ended the year where we expected to with inventories at the right place. And that's -- part of that is we did have softer cold and flu, but we had stronger Oral Health business, which helped offset that. And we also have plans in place that we know is going to help us improve through the year. So for instance, in Q2, we have a lot of key customers doing shelving resets. We're gaining distribution. We're gaining shelf placement.

On the profit side, the productivity program continues to deliver. You saw the 220 basis points of gross margin improvement. We feel great about that. That, combined with the efficiencies coming from the operating model, will allow us to deliver high single-digit operating growth at constant currency and still invest in growth, still invest in A&P, R&D and some key capabilities that we're continuing to build on.

So now if we step back and think the medium-term guidance. I mean you said it, the guidance doesn't necessarily mean we're going to be outside the range. But obviously, part of the guidance is outside our medium-term range. I think it's an acknowledgment of the uncertain market we're dealing with. Based on what we know today, we'd expect to be in the middle of that range, based on what we know today. You also asked about the phasing. What we do know today is that Q1 cold and flu season is going to be below a year ago. We're now almost 2 months into the quarter. And the results, we saw a spike towards the end of the year, and then we saw it come down after that.

So we're going to be below a year ago, and that's not only in the U.S., it's outside the U.S. My confidence, listen, these are still attractive categories. I still believe there's huge potential. Everything we've talked about in the past, closing the instant treatment gap, success of our premiumization continuing, the low-income consumer opportunity, which we're still only at the beginning at. And as we progress through 2026, I expect to see stronger performance in North America, as I said and continued strength in emerging markets.

We feel good about China, and I expect an acceleration in India. Actually, India for us is performing extremely well. And then as we continue to drive that productivity agenda, again, we will be able to continue to invest in the business, which again underpins my confidence in getting back to that 4% to 6% growth.

Our next question is from Warren Ackerman from Barclays.

It's Warren Ackerman here at Barclays. Outside of the numbers, Brian, could you talk about the new reorganization? You've got a new Chief Growth Officer, Chief Transformation Officer, new reporting structure, new hires in the U.S. other than Natalie I've seen. Can you maybe sort of walk us through how that's going to be a growth unlock and how you'll drive more volume growth in the U.S., more innovation? Anything you can say on sort of shelf resets and how the things are shaping up in the U.S. in what is clearly a tougher operating environment?

Thanks, Warren. And I think you captured it. This is first and foremost about unlocking growth and agility. And I think about the journey we've been on as a company, we're now 3.5 years in as a company. The strategy we laid out is very clear. And there was still an opportunity for us to streamline and simplify the way we work and drive strategy to execution.

So as you said, we created this Chief Growth Officer role that combines our category structure, our marketing effectiveness and capabilities, our business insights and analytics strategy and a new commercial excellence function. And then 6 operating units replacing our 3 regions. As you're aware, Latin America, India and Middle East, Africa will now have a seat around the leadership team table. So I think a couple of things. It's one on the commercial execution function that we've created.

Centrally, we're driving AI-driven tools behind net revenue management, next best action. We're going to be able to drive this quicker and faster through the organization. This structure of CGO, the 6 operating units, is going to allow us to really, really much quicker drive our category strategies through to execution, better leverage scale, better be able to move resources around, react to, what I would say, as you said, a very uncertain environment. And then as a result of it, we're taking a layer out of the organization.

So we're talking about a flatter, leaner organization, and that leads to the $175 million to $200 million in gross savings we talked about, which gives us incredible flexibility, frankly, to invest in those growth opportunities and to invest in innovation and drive the capabilities.

Now your question on the U.S. -- specifically on the U.S., yes, well, first of all, overall in the team, we did, as part of those changes, bring new members of the team. We got a fantastic leader in India, a fantastic leader in Latin America that came from outside the company who know these markets extremely well. Our Middle East, Africa leader is now sitting on the leadership team, and she's an incredible talent. In the U.S., as part of all this, Natalie made a number of changes in our category heads or category general managers. So we have one of our top talents now on the OTC business. We brought external talent in Oral Health and in the Wellness category, which is a combination of VMS and Digestive Health.

I mentioned it a bit earlier, Warren, but we know that in Q2, we will see across a number of key customers, some wins on distribution and shelving across Oral Health, VMS and Pain Relief, and that's locked. That's going to happen in Q2, and we feel good about that commercial execution. We also feel good about the innovation. The one thing I will say, it's broadly across the business, specifically in the U.S., Oral Health is doing incredibly well. And it really did better in Q4 than we expected, which again helped us offset, land the U.S. where we wanted to despite the tough cold and flu season.

Our next question is from David Hayes with Jefferies.

So just on emerging markets, there was a sequential slowdown in the fourth quarter. So just trying to dig a little bit deeper into whether the emerging is performing as you would expect it to be, like it to be at the moment. And then which areas specifically maybe are not doing as well? And I guess in that context, Oral Care continues to be amazing and impressive, obviously, still in this difficult consumer environment.

So is there something different about Oral Care and the dynamics there versus some of the other categories ex Respiratory because of the cold and flu? But it feels like Oral Care could ride the consumer dynamic whereas the other brands can't. Is there something you point to that says that this is what's going to change as the consumer maybe picks up in the other areas?

Yes. Thanks, David. So listen, I will take the Oral Care question linking to other categories, and I'll pass it to Dawn to talk about what we're seeing more broadly in emerging markets. So first of all, we do feel really good, as you pointed about around Oral Care. And as we've been talking about now for a while, the clinical range in Sensodyne has really resonated well with consumers. And it's beyond clinical white, it's clinical repair, it's clinical enamel strength.

Beyond that, we're seeing great progress in places like India with low-income consumer on Oral Health. And Parodontax is an amazing brand in gum health. We don't talk about it as much as Sensodyne. It's obviously not as big, but it's growing in the strong double digit in the mid-teens. We launched in China this past year. It's still quite early in our ramp-up for distribution, but we couldn't be happier with the progress that we're seeing there. So we feel great about Oral Health. And the Oral Health model is very, very clear. It's linked to the dental recommendation. It's linked to the innovation. And obviously, we compete on the therapeutic side of the business.

Listen, in the other categories, quite -- listen, when we talk about the impact of cold and flu, to be clear, we talk about our cold and flu portfolio specifically, which are brands like Theraflu and Robitussin and Otrivin, which sit in that category. There is also impacts across other areas like Pain Relief and some VMS and things like that tend not to be as much but there does tend to be a little bit of that impact that happens, too.

Fundamentally, I believe these are real strong categories that as we move forward, we can move ahead. I think we're just radically differentiated versus the competition in Oral Health in a way that's very, very unique. We're talking about now over 10 years of kind of high single-digit to double-digit growth in Sensodyne, and we continue to see that continuing to hum. And we're seeing good competitiveness in the other categories, but we're continuing to focus on innovation, things like our 12-hour patch launch on Voltaren in a number of European countries. Otrivin Nasal Mist continues to do well. We're growing aggressive share there. Our OptiSorb technology on Panadol, we're rolling out to another [indiscernible] market. So we feel like we have a good innovation plan that should underpin our -- certainly our medium-term guidance. Dawn?

Yes. Good morning, David. Hi, everyone. So let me talk a bit about emerging markets because we feel really excited about our emerging markets business. If I look at Asia Pac, first of all, I mean, we continue to deliver strong performance in Asia Pac. We expected an acceleration in half 2 versus half 1, and that has come through. And when I look at the growth drivers in Asia Pac, 80% of our growth is coming from volume mix. And that is a factor of us driving penetration and expanding reach across lower-income consumer groups.

If I look within Asia Pac, let me talk about India. I mean, an incredible performance in India, double-digit growth in the year, an acceleration in quarter 4 on the back of the macro changes around GST, but also on the fact of our activations. If I look at our INR 20 pack and Sensodyne is performing incredibly well. We continue to expand our reach across rural areas, across villages based on our investment in terms of bringing our sales force in-house. And actually, I was out in India the first week of this year, and it was great to be on the ground with the team, visiting stores and really seeing our brands come to life. So that was India.

If I look at China, we're also really excited about China, mid-single-digit growth in the year. And just some pockets to talk about. If I look at our e-com business, it's around 40% of our business in China. And Douyin, we're growing more than 100%. And our online to offline business is also growing double digits. So actually, we feel really good about China.

If I move on then to EMEA, LatAm. EMEA, LatAm, actually, we've seen a good performance, particularly across LatAm and EMEA, Middle East and Africa as well as Central Europe. But it is fair to say that whilst we've seen a good performance, particularly in LatAm and specifically Brazil, we are seeing a much more challenging macro backdrop, both in terms of the consumer behavior, but also in terms of retailer behavior as well. So we did see a slowdown in LatAm, particularly in quarter 4.

And if I talk about kind of Middle East, Africa continues to perform well. Central Europe also has seen a good performance. But again, based on the soft cough, cold and flu season in quarter 4, we saw a slowdown in Central Europe because of that. But overall, as I said, we're really excited about emerging markets. It's a huge growth opportunity for us. When I look at our A&P investment, half of our increase in A&P investment in the year actually went to emerging markets, and you can see that coming through in the performance.

Our next question is from Celine Pannuti with JPMorgan.

My question comes back on the overall guidance and how you manage top line performance versus margin improvement. Clearly, strong delivery in margin and your cost savings initiative augurs well for the years to come. At the same time, your top line has disappointed. And if I look at the past 3 years, volume has been 1%, which is quite low compared to the overall European staples, best-in-class are trying to achieve at least 2% and above. So in order to grow 4% to 6%, what kind of volume level do you think you need to have? And how do you -- like the discrepancy between margin progression and volume performance, does it mean that you may need to reinvest more or maybe look at your price positioning in order to grow volume faster?

No, thanks for the question, Celine. So let me kick that off, and then I'll pass it to Dawn to give a bit more perspective. I think if you take a step back, I do think we're investing in the right places on the business. If you look at our A&P investment in the last year, we were over 7% ahead of a year ago, and R&D was over 7% ahead of a year ago. That is the absolute benefit of the gross margin improvement and the improvements we've seen in our supply chain and structure, giving us 220 basis points of operating -- of gross margin improvement, which is allowing us to invest in the business. We continue to focus on where is the best of that investment.

By the way, a lot of that incremental investment this year went against Oral Health, and you see the results that have come out. And we understand that in a lower cold and flu season, also while we can gain share, we're going to have a very difficult time driving volume overall. But maybe, Dawn, you can talk a little bit about how we see the algorithm going forward and where we see the role of volume growth, which we're very focused on volume growth. So Dawn?

Yes. Thanks for the question, Celine. And you're right, and Brian mentioned it, we are very focused on driving volume growth in 2026 and moving forward. We've always said that the right price volume mix split for this business is around 60-40, 40-60. I already talked about Asia Pac in terms of 80% of that growth is coming from volume on Asia Pac, and we feel really good about that. When I look at EMEA, LatAm, if I take out the two shoulders of the year, so if I take out Q1 and Q4 for 2025, where we had a soft cough, cold and flu season, actually, in Q2 and Q3, we did see a more balanced price volume mix profile. And that obviously should give us confidence moving forward that we can deliver that.

And then if I look at North America, look, it's been a really challenging market in North America in 2025. But as Brian has talked about, we have put in place the key actions to drive volume growth in 2026, whether it's about us no longer doing destocking, whether it's about reducing the drag from smokers health, the distribution builds that we expect to get from shelf resets as well as the strong activations. These are all important drivers in terms of driving the volume growth. So whilst for '26, I'm not going to guide to specific volumes, I would expect us to be improving the split of price volume mix in '26.

Our next question is from Olivier Nicolai with Goldman Sachs.

I got one question first. Could you go back to the change you have implemented in the U.S. over the last 12 months and specifically also the incentive structure you put in place for the new management there? And just following up on the press release on Page 5 regarding the overall equipment effectiveness. It has improved by 7 points in 2025. It's a bit lower than what you expected at H1. Should we assume a stronger improvement in '26 compared to '25 on these metrics?

Yes. So thanks for the question. Let me talk a bit about the U.S. As you know, we announced a new leader in the U.S. in May. As we looked at our operating model structure broadly, we worked very closely as an executive team to define that. I talked a little bit earlier when Warren asked the question about that and we worked that very closely with the U.S. So one of the things we've done is we've created [indiscernible] category General Manager role, which obviously report directly up to our President of the U.S. and also are connected to our global category heads, which is going to help us really drive kind of this strategy to execution even faster.

We're making a number of changes around net revenue management and the tools that we're providing. We've made a number of changes in our sales force and our sales leadership and structure. And all of that was really pretty much done on January 8 when we announced the broader stuff in the U.S., you obviously move much faster on those kind of changes. So I feel really good about those changes and how they're going to drive growth. And as I said, we've seen progress to date. There's no question about it.

We ended up again where we expected to. Inventories are kind of where we expected to. Oral Health has been extremely strong. Advil grew share in Q4. So that was a really important element. We're seeing -- we see these opportunities on the distribution and stuff that I talked about in Q2. So I feel like we're in a very good place to really drive those changes in the U.S.

Yes. And I think, look, in terms of the productivity program, Brian talked about it, we're really pleased with our supply chain productivity program. It was even better than we expected. I mean, 220 basis points improvement in gross margin is incredible in the year, and it is a collective effort across the whole organization. And that's important because it helps to drive flexibility and agility in the P&L to be able to invest for growth.

And if you remember, we talked about 3 drivers of how are we going to deliver that gross margin improvement and productivity benefit. The first one we talked about was immediate accelerators. So this was reducing complexity in our supply chain, whether it's around number of languages on pack, harmonizing packaging, formulations. And let me give you an example. So in Europe, in 2025, on our Aquafresh brand, we had 44 single language packs. And we've now reduced to 18 multi-language packs in the year. And that is a huge optimization piece in terms of supply chain.

The second area that you referenced in your question was around operational efficiency. And this is all about debottlenecking upfront, process improvements, equipment optimization. And let me give you an example of that. In our Levice factory in Europe, we reduced formulations by 30%. So if you think about the impact of that, that reduces change over time, but it also increases the capacity, the available capacity on that line, which is really important.

So I think, as I said, it's an incredible effort that is helping us to continue to invest in the business to drive growth. Moving forward, I wouldn't expect to see, it would be great if we had that level of improvement each year. But moving forward, 50 to 80 basis points is what we've built into our guidance. That will be a strong performance on supply chain productivity.

Our next question is from Jeremy Fialko with HSBC.

So the one for me is more on the U.S. market more generally. So the first element is just the pharma channel within the U.S. Do you see that continuing to be under pressure in 2026? Or do you think with some of the ownership changes there, there's the possibility that the channel could become a little bit better in some of the broader drops there, which have, I guess, led to pressure on inventories and overall sell-through could abate? And then maybe if you look at the U.S. more broadly, is it just a case of waiting for the consumer to get a bit better before the market growth can improve? Or are there some other elements that you think are kind of specific to the market getting a bit better, let's say, putting aside any cold and flu impacts?

Thanks, Jeremy. Thanks for the question. Let me take that. I think as you talk pharmacy channel, really, what we've talked about is the 2 big retailers in the U.S., which is Walgreens and CVS. What I can say is we see the channel shift that we've seen for many years, which is drug channel and obviously, e-com. E-com growing quite aggressively and that's walmart.com or that's amazon.com, that will continue. The dynamic we saw in 2025 was lower inventory levels in those retailers as they were dealing with their own challenges. We believe we're where we need to be, and now we're just managing normal channel shift as we can.

And by the way, that channel shift is not a bad thing for us. If we look at our Amazon shares, 18 brands on Amazon account for 90% of our business on Amazon and 16 of those 18 brands have higher share online than offline. So as that channel shift moves, it's something we can take advantage of. We have good capabilities there. So we feel good about that channel shift. Yet to be seen what happens under new ownership at Walgreens, if that's a positive or not a positive.

But again, I don't feel like this is a situation that if gets worse, we baked it in. We proactively managed our inventory levels to try to be at a place where we felt good about so we can stop talking about it as we move forward.

In the overall market, you said ex seasonality, so I will take that out because there's certainly a seasonality impact that we're kind of seeing. Listen, what we see in the dynamic is we see club channel doing a bit better, dollar channel doing a bit better as consumers are looking for more value. Some consumers looking for lower price points, some consumers looking for -- different consumer want value, higher price point, lower price per use. We're very focused on those 2 channels and increasing our offering to make sure that we're meeting the affordability issues of consumers in the U.S.

And we believe we can also play a role, and we do play a role certainly in Oral Health in driving that category growth. So we're not sitting back and waiting for the categories to change. We're just acknowledging that we -- there are some things we can't control. We're focused on competitiveness, growing market share. We feel confident in that, and we're focused on driving that category growth where we can.

Our next question is coming from Sarah Simon with Morgan Stanley.

Just one question from me. How important is it in terms of securing shelf space and sort of with your retailer negotiations to have that cold and flu business? Because I think in your bit to become a sort of steady compounder with predictable top line, this is obviously the kind of bit that's causing the biggest issue. So I'm just wondering how much do you need to own that business?

Okay. Sarah, thanks for the question. Let me take that. Listen, I think cold and flu plays an incredibly enormous role in consumer health and for consumers. And if you look over the history, I've been involved in the -- in consumer health now for over 20 years. So I've seen quite a few cold and flu seasons. This year, we're seeing kind of two seasons in a row that are down because if you remember last year, we were down. We know that Q1 is also going to be down. It doesn't happen that often, but it has happened in the past. We've experienced that in the past.

I believe if you look over time, you're going to see growth in this category going forward. It's a bit exasperated this year because we are dealing with multiple headwinds in the U.S. environment, which this has compounded on. But I think it's a very important category. We feel good about our positions in the category and our portfolio. I think it's going to -- it plays a very important role for our customers, too, as you were saying, this is category management around pain and cold and flu. And frankly, cold and flu and pain have some common brands, Panadol Cold and Flu, Advil Cold and Flu. So we think it's an important part of the portfolio as we move forward.

Our next question is come from Karel Zoete with Kepler.

I'd like to go a bit deeper into 2 categories. The first one is the Digestive Health business. Historically, a good business for you, not so seasonal, but we've seen a slowdown in '25. What should we anticipate for '26? Why should things get better? And then coming back to pain, I know there's a bit of cold and flu impact in there. But if you zoom out, 2024, '25 have not been great years for pain despite of some of your strongest franchises such as Panadol in Asia are there. So what is needed for the pain franchise to start performing more in line with the anticipated growth rates?

Okay. Thanks very much, Karel. I appreciate the questions. So let me start with Digestive Health. If you think about our Digestive Health business, just to get us grounded, it is -- over 80% of that business is focused in 3 countries: U.S., India and Brazil. In India and Brazil, it's ENO, which is a fantastic brand and does very well in both cases and is part of our strategy and our growth strategy, certainly in both those countries and certainly in India.

So now you get to the U.S. where we have Tums, we have Nexium, brands like Gasx and XLax, Benefiber, which is a fantastic brand. We have seen a drag on Nexium in the U.S. There's no question that is one brand in one category, and we're not alone in this that has been impacted by private label. If I zoom out and look at the U.S. overall, we've gained share versus private label. But Nexium has been a bit of a challenge there.

One of the opportunities we see in Digestive Health, and we feel really good about and we're now working is supporting consumers on GLP-1s because there's multiple side effects on GLP-1s that brands like Tums and brands like Benefiber address. There's also side effects like dry mouth, which we have a mouthwash brand. We don't talk about much in the U.S., Biotene, which is actually quite effective in dry mouth. And there's nutritional supplementation, and we've actually created the Centrum variant that's specifically focused to GLP-1 consumers.

So we see an opportunity across our categories to drive that. Tums is a tremendously performing brand and so is Benefiber. We have dealt with a little bit of a drag from the Nexium side of the business.

Listen, on Pain Relief, it's a great portfolio. I mean, Voltaren is #1 topical analgesic in the world. By the way, we talk about -- a lot about the topical. We also have a very strong patch business. I mentioned earlier, we're launching 24-hour patch in a number of markets around the world, and we're seeing quite a successful pickup of that. Panadol has done quite well in Asia. We don't have quite the same strength of a systemic pain relief business through Europe, and we're addressing that. We're launching there.

And the big thing is on Advil. Like I said, we're growing Advil share in Q4. We're really confident that now with the new structure, with the new focus, our ability to invest and everything else that will get Advil back to a more consistent performer. That's going to be important for us. So that's one of the things we need to make sure that we drive and deliver on the business.

But overall, listen, we've always said the OTC categories in general would be 2% to 3% growth categories, and we could outgrow that. They've seen a little bit of headwinds here and in the U.S. as all categories have been a bit muted, again, not super declines, but a bit muted. So we're addressing that, but we feel very good about that franchise and the global nature of that franchise.

Our next question is from Edward Lewis with Rothschild & Co Redburn.

Brian, just returning to the medium-term guidance. Should we think that getting back to that range is all about the U.S.? Or do you think you can deliver against that with a structurally slower U.S. market but greater contribution from the rest of the world, given the confidence you're obviously expressing about India and China?

Yes. So listen, as I think about the medium-term guidance, I do expect that the U.S. will perform better. There's two things. We've outperformed the market, to be clear, in 2025. But do I feel like the performance is -- we're hitting it on all cylinders? We have not. We can do better. Just outperforming the market isn't enough, and I am confident we can do better. So we do expect an improvement in that U.S. environment. And I believe over the next couple of years, we'll get that U.S. environment, if not too close to the bottom end of our algorithm growth.

Outside of that, we also expect that, again, over time, emerging markets will continue to be a strong contributor and the low-income consumer strategy we have, which is taking hold in certain places, and we're learning a lot, to be very clear. And that takes a bit of time to kind of build up to be significant, and we see those opportunities. So overall, I do feel the medium term of 4% to 6% that nothing has fundamentally changed versus what we have said and what we've said in the past about our strategy and our opportunities.

What you're hearing from us this year is 3% to 5% because the market is still quite uncertain, and we want to make sure we're providing the proper context for everyone on where we see things are at. And again, where we sit now, knowing Q1 is going to be softer due to cold and flu, middle of the range is kind of where we're at on that, and we'll update as the year goes on.

Our next question is from Tom Sykes with Deutsche Bank.

One quick follow-up and one on A&P, please. Are you able to quantify the shelf space stocking benefit that you'll get in either Q1 or Q2 in North America, please? And then just on the A&P spend, I mean, there can't be many consumer companies that have increased A&P by almost 8% to 20% of sales and still running at negative volumes. So where is the A&P ineffective? And where is it effective? And does it make much of a difference in your non-oral care businesses at the moment? And can you talk about whether you're allocating more of that A&P increase to oral care or to non-oral care, please?

Thanks, Tom. Thanks for the question. Let me take the U.S. stocking, and I'll pass it to Dawn on the A&P question. Listen, we're not going to guide to specific improvements on the shelving increases. But let's just say it's part of the thing that gives us the confidence as we progress through the year that we'll see stronger results because it's real. Consumers will see more of our brands. We will have a bigger shelf space and in a number of cases, we'll be at a better visibility point in some key resellers. Dawn, do you want to talk about A&P?

Yes. Look, thanks for the question. And I think it also builds on one of the comments that Celine talked about in terms of the margin profile as well. So let me say a few words about that. I think, look, it's often easy for companies to cut A&P when the market is more challenging. We have not done that, and we haven't done that because we're really focused on ensuring the long-term sustainable growth for this business. So we -- you're right, we've increased A&P 7.5%. We've increased R&D 7.7% in the year. And we invest in our brands at a healthy and the right level to drive that sustainable growth.

So if I kind of give a bit more color behind that. So what -- where has that increase in A&P, where has it gone? We've already talked about it. Half of that increase went to Oral Health. You've seen the growth momentum on that this year in terms of high single digit and acceleration in Q4 and the ROI on that Oral Health is incredibly strong. The other half, I referenced it earlier, went to emerging markets. So India, D-com in China, and that's really important.

And the third area actually is around experts. So expert is a critical part of our business model in terms of the work that we're doing around the Haleon Health portal, where registrations have increased 27% in the year and on our field force engagement, which has also increased 16% in the year. So that's where the spend has gone.

The other thing that we are particularly focused on as well as ensuring it's the right level is also around the return, the efficiency and the effectiveness. So in the year, we've improved our working, nonworking split, so 12% growth in working media. We've also increased our overall ROI mid-single digit, and we've increased the coverage, the global coverage to around 3/4 of our business. The other thing that we're focused on is also the mix. So 60% of our working media is allocated to digital. And that's an important balance for us as we think about the shift in the broader economy.

So I would say, overall, look, it's an important focus area for us. We invest at a healthy level, 20.5%. I feel really good about that. And we also continue to focus on improving the efficiency and effectiveness of our spend as well as ensuring that we are shifting and having the right mix around digital versus legacy.

Okay. Super. Thanks, Dawn. Listen, I think we are going to close the call now. So thanks, everyone. I appreciate you joining us today. Look forward to catching up with all of you in upcoming meetings and roadshows. And please feel free to reach out to the IR team if you have any further questions. Really appreciate your continued interest and support in Haleon. Thanks, everybody.

Thank you. That concludes Haleon Fiscal Year 2025 Results Q&A. Thank you for your participation. You may now disconnect your lines.

Hello, and welcome to our full year results presentation. 2025 was an important year for Haleon, and we made good progress against our 3 strategic priorities: first, delivering competitive growth in a challenging environment; second, unlocking productivity gains; and third, embedding an agile performance-focused culture. In terms of growth, in 2025, we delivered 3% organic sales growth, which is lower than our medium-term guidance of 4% to 6%. That was primarily the result of lower category growth than we've seen historically, which was related to our winter season portfolio, along with consumer confidence reaching multiyear lows in some of our key geographies, impacting consumer spending.

Against that backdrop, our brand portfolio performed well, outperforming our global categories with 60% of the business gaining or maintaining share. We remain confident that we can continue to outperform as we focus on the key opportunities we outlined at our Capital Markets Day. Let me give you some examples. In China, we're closing the incident versus treatment gap through the launch of parodontax. As the largest gum health market in the world, there is a significant opportunity in China. And parodontax has become one of the top-selling innovations across China's 3 largest cities: Beijing, Shanghai and Guangzhou and now in over 10,000 stores.

We're accelerating the rollout to 20 cities this year to drive further penetration. And within sensitivity, Sensodyne's expanded clinical range, including Sensodyne Clinical White, Clinical Repair and Clinical Enamel Strength have driven strong uptake among younger consumers. The range is now in 30 markets globally, with Sensodyne growing over 1.5x the overall category. We're also delivering innovation-led premiumization. In North America, we launched our Nasal Mist technology under the Theraflu brand following its success with Otrivin. And that's driving strong market share gains. We also brought Advil Liqui-Gel Minis to consumers in North America. We've continued to make good progress driving penetration among lower-income consumers.

Take India, where we're growing our categories by bringing in more consumers. We're doing that by doubling our direct coverage in small towns and villages to 600,000 outlets. We've also launched new products such as the INR 10 Centrum Recharge and ENO 3-in-1 as well as driving more users into oral health through our INR 20 Sensodyne pack. Turning now to our productivity agenda. We've made excellent progress with our GBP 800 million gross cost savings program, which enabled us to deliver strong operating leverage across the year. We're also tracking well against our targets to reduce SKUs, packaging and formulations by around 30% over the next 3 years.

We have also increased our multi-sourcing of ingredients to around 90%. That progress is enabling us to close the gap between our peers on service, cost and inventory. At the same time, we remain best-in-class on safety and quality measures. And finally, culture. We're making real strides in transforming Haleon into a world-class consumer company with an agile performance-focused culture. In January, we announced plans to evolve our operating model to drive growth and agility in support of our Win as One strategy. I'll come back to this in a minute, and we'll talk through how our new operating model will drive our performance.

Now let's look at our results in more detail. As I just mentioned, full year organic revenue growth was up 3% for the year. That was split 2.3% price and 0.7% volume mix. In Q4, we grew 2.1%. That was a result of a much weaker cold and flu season, which had a drag of 40 basis points on our full year organic revenue growth and 150 basis points in the fourth quarter. To be clear, we are not satisfied with our organic revenue performance in 2025, and we are focused on delivering stronger top line growth. I'll say more about how we're going to do this in a minute, looking specifically at how we're evolving our operating model to drive growth and agility and the progress we're making in North America to return the business to growth.

That said, we delivered very strong gross margin performance in the year, up 220 basis points, resulting in 10.5% organic profit growth with 60 basis points of margin improvement at reported rates. Importantly, we did that while prioritizing investment in innovation, A&P and building capabilities in critical areas such as data and technology. Cash performance was also strong, and leverage is now at 2.6x net debt to adjusted EBITDA. Consistent with our capital allocation priorities, we have allocated GBP 500 million to share buybacks in 2026 and remain focused on identifying value-accretive bolt-on acquisitions.

Turning to our outlook for 2026. We are not planning for a material improvement in global category growth with consumers in some markets likely to remain cautious. We expect to return our North America business to growth. To do that, we are building on the actions we've already taken over the last 6 months. And we're also expecting continued strength in our emerging markets. We'll drive our performance through disciplined targeted actions. We'll be investing in A&P and R&D, accelerating our innovation agenda and sharpening our commercial execution. This will allow us to drive category growth and to continue to outperform the market.

Against that backdrop, we expect full year 2026 organic revenue growth to be in the range of 3% to 5%. Strong gross margin expansion through our ongoing productivity initiatives will allow us to continue to invest and deliver high-single-digit operating profit growth. Looking further ahead, we are confident in our medium-term guidance of 4% to 6% annual organic revenue growth with high-single-digit adjusted operating profit growth at constant currency.

My confidence comes from the strong progress we continue to make against our Win as One strategy, driving stronger performance in North America, continuing to deliver on our productivity agenda, which underpins our investment in building leading brands and market positions and unlocking growth and agility through our new operating model. I'll now hand over to Dawn to talk through our full year results in more detail.

Thank you, Brian. Good morning, everyone. In 2025, we delivered strong organic operating profit of 10.5% and free cash flow of GBP 1.9 billion, in line with our value creation framework. Operating leverage was strong driven by gross margin improvement of 220 basis points. This was ahead of our expectations and enabled further increases in investment in A&P and R&D, while delivering more to the bottom line. Cash generation was fueled by an 11-day reduction in working capital, and we continued our track record of disciplined capital allocation, completing our China JV acquisition and returning GBP 1.1 billion of cash to shareholders.

Despite these strong financial results, to be clear, we are not satisfied with our organic revenue growth. I am focused on unlocking productivity to drive flexibility and agility in the P&L to enable further growth. Let's look at the performance in more detail, starting with revenue. Organic revenue growth was 3%, split 2.3% price and 0.7% from volume mix. The key drivers of revenue growth were continued outperformance in Oral Health, strong volume growth in Asia Pac, resilient growth in Europe, helped by strength in the pharmacy channel. This was offset by lower category growth, especially in the U.S. and LatAm, proactive inventory actions in North America and lower-than-expected levels of cold and flu incidents in quarter 4.

Overall, reported revenue declined 1.8%, impacted by a drag of 2% from divestments and 2.8% from foreign exchange. Turning to profit. We delivered 22.9% of operating profit margin, up 60 basis points at actual rates. This was driven by 160 basis points of organic operating profit margin, offset by 100 basis points of headwinds from translational foreign exchange and divestments. Looking at the drivers in more detail. We continue to invest in our core portfolio, innovation and key growth markets such as India, and we increased A&P spend by 7.5% at constant currency to 20.5% of sales. At the same time, we are focusing on maximizing the efficiency and effectiveness of our spend and improving our ROI.

We continue to invest in new and differentiated claims as well as accelerating our innovation pipeline with R&D spend up 7.7% at constant currency. On supply chain productivity, we have made excellent progress with more opportunity ahead. The key productivity drivers were reduction of SKUs and formulations, increased equipment effectiveness and optimized freight routes as well as network optimization. Diving a bit deeper into our revenue drivers, starting with performance across our categories. Oral Health continues to outperform, delivering high-single-digit growth in 9 out of the last 12 quarters. For the year, we grew 7.9%, around 1.5x ahead of the market through a combination of excellent execution, expert recommendation and superior innovation.

We continue to attract incremental consumers and drive category growth. This is demonstrated by high-single-digit growth in Sensodyne and double-digit growth in parodontax. We are confident in the runway for future growth in Oral Health, underpinned by a strong innovation pipeline and further geographic expansion. VMS grew 1.9%. Good performance outside the U.S. continues with mid-single-digit growth driven by premium innovation such as Centrum Daily Kits in China and Korea as well as Centrum Kids in Philippines. VMS in North America was impacted by a softer multivitamin category and distribution losses, which have now been addressed.

Across OTC, pain relief grew 2.3%. Panadol grew ahead of the market with mid-single-digit growth, driven by the activation of our Optizorb technology and the launch of dual action. The launch of Voltaren patches in Europe and 2% formulation in China drove an improving trend of low-single-digit growth with strength across several markets. And the new campaign and launch of Advil Liqui-Gels Minis in the U.S. is showing early positive signs. Respiratory Health declined 1.9%. Within this, Otrivin Nasal Mist continues to grow the category, driven by increased trial and strong repurchase intent above 80%. This strong performance was more than offset by a continued challenging consumer and competitive environment on U.S. smokers health, which declined double digit in the year as well as a slower-than-normal start to the cold and flu season in the fourth quarter.

This impacted the group revenue by around 150 basis points in the fourth quarter and 40 basis points for the full year. Stepping back, while 2025 has been a challenging year for our seasonal business, we have a high-quality portfolio of leading brands and Respiratory Health remains an attractive category that is very relevant for consumers. We expect this business to return to growth in the future. Digestive Health grew 0.5%, driven by Tums Gummy Bites innovation and retail exclusive flavors, along with Benefiber's Grow What Feels Good campaign. These strong performances were offset by a decline in Nexium. And finally, Therapeutic Skin Health and Other grew 2% with strength in Zovirax, partly offset by a decline in Fenistil.

Turning now to the regions, starting with North America. In North America, category growth is soft. Consumer confidence is low. And as a result, consumers are increasingly seeking convenience and value. Against this backdrop, trust in our brands remains strong, and we have outperformed a weak market with an acceleration in the fourth quarter. Organic revenue for the year declined 0.4%, split 1% price and 1.4% decline in volume/mix. As expected, performance in the second half of the year was in line with the first half. In quarter 4, the region delivered 1% organic revenue decline, split 2.7% price and 3.7% decline in volume mix. This was driven by tailwinds of pricing and a better-than-expected outperformance, particularly in Oral Health, which was offset by a weaker cold and flu season compared to 2024, the lapping of the Eroxon sell-in and further proactive inventory reduction in the drug channel, which is now at a more appropriate level.

For the year, we delivered adjusted operating margin down 20 basis points versus the prior year. Turning now to EMEA and Latin America. In most of Europe, we have seen a resilient performance this year despite fragile consumer confidence. The economic picture in Middle East and Africa remains positive. And in Latin America, particularly in Brazil, the macro picture is increasingly more challenging. Organic revenue increased 4.7%, split by 4.2% from price and 0.5% from volume/mix. In quarter 4, organic revenue growth was 3.2%, split 3.5% price and a decline of 0.3% in volume mix. While Oral Health strength continues, quarter 4 was impacted by a weaker cold and flu season and a more challenging macro picture in Europe and LatAm.

For the year, operating leverage was strong with adjusted operating margin up 90 basis points versus the prior year. In Asia Pacific, consumers continue to prioritize everyday health spending. This underpins our excitement in the growth opportunity that China and India represent. Organic revenue grew 5.2% with 80% of growth coming from volume. China grew mid-single digit, driven by strength in Pain Relief and Oral Health, including Sensodyne and the continued rollout of parodontax. India delivered double-digit growth, driven by expanded distribution and excellent in-market execution. This strong performance also benefited from macro changes, including, for example, GST.

In the fourth quarter, organic revenue grew 5.9%, split by a decline of 0.3% price and growth of 6.2% in volume/mix. The slight decline in price was driven by the year-on-year timing differences of pricing and promotional phasing in some markets. For the year, we delivered adjusted operating margin of 21.5%, up 40 basis points versus the prior year. Let's now look at the remaining drivers of earnings. Adjusted diluted EPS grew 5%. In addition to the operating profit drivers I have already outlined, EPS growth was also driven by a lower net interest charge from a reduction in net debt, lower interest rates and favorable foreign exchange on U.S. dollar-denominated debt. A shift in the geographic mix of profit drove a small increase of 50 basis points in our effective tax rate to 24.5%, lower noncontrolling interest following our purchase of the China JV and a 1.6% reduction in average share count.

Adjusting items of GBP 114 million were significantly lower than last year. Key items included a net amortization and impairment charge for intangible assets of GBP 60 million and restructuring costs of GBP 89 million, mainly due to the GBP 300 million productivity program, which is now complete. Haleon is a highly cash-generative business. We delivered GBP 1.9 billion of free cash flow, GBP 194 million more than the prior year on a like-for-like basis. We are making good progress on reducing working capital with an 11-day reduction versus 2024. This was driven by a 4-day reduction in inventory days as a result of the supply chain initiatives, along with the optimization of payment terms.

CapEx increased to 3.7% of sales, driven by additional spend on growth and productivity. This increase in CapEx was offset by GBP 125 million lower restructuring costs and GBP 68 million lower dividend to our China JV partner. Before looking at capital allocation, I'd like to take a moment to talk through the financial impacts of our new operating model. As Brian mentioned, we are evolving our operating model to drive growth and agility. While cost savings are not the primary driver, these initiatives should result in GBP 175 million to GBP 200 million of gross annualized savings, which I expect to be delivered 1/3, 2/3 weighted over the next 2 years. These savings will largely be driven by a flatter, more streamlined organization as well as leveraging automation and AI. One-time costs to deliver these savings are expected to be in the ratio of 1:1 with a higher weighting of cost to the first year.

We expect the majority of these costs to be cash related. In addition to the supply chain productivity program, these savings will provide even more fuel to drive growth, flexibility and agility in the P&L. We have a strong track record of disciplined capital allocation. Our priorities are focused on investing for growth, bolt-on M&A and returning excess cash to shareholders. This is all underpinned by our strong investment-grade balance sheet and our commitment to a medium-term leverage target of around 2.5x net debt to adjusted EBITDA.

Consistent with our track record of delivering attractive shareholder returns, we are announcing GBP 500 million allocation to share buybacks for 2026. In line with our dividend policy to grow dividends at least in line with earnings, the Board has proposed a final dividend of 4.9p, which represents a 7.6% increase in the total dividend for the year to 7.1p. So turning to the outlook for 2026. We expect to deliver 3% to 5% organic revenue growth with North America returning to growth, continued strength in emerging markets, particularly India and China, ongoing resilience in Europe and a more challenging macro picture in Brazil.

We expect another year of high single-digit adjusted operating profit growth at constant currency, driven by gross margin improvement of 50 to 80 basis points, fueling further investment in A&P and R&D. We expect net interest expense to be around GBP 255 million and an estimated effective tax rate on adjusted profit of around 24.5%. Overall, this will drive operating leverage, strong EPS growth and a healthy free cash flow generation.

In summary, we delivered good financial performance despite the lower revenue growth, 60 basis points of operating margin improvement, 5% adjusted diluted EPS growth and strong free cash flow generation of GBP 1.9 billion. Looking ahead, I am focused on building flexibility and agility in our P&L by unlocking productivity savings to drive sustained investment in growth. Alongside this, an even sharper focus on return on capital reinforces our confidence in our medium-term guidance. And with that, back to Brian.

Thanks, Dawn. Now I'd like to come back to culture and specifically our new operating model. I'll talk briefly about how it will enable our transformation into a world-class consumer company and how it will drive growth and agility in support of our Win as One strategy. In January, we set out what our new operating model will look like, starting with my leadership team. It's built to create the conditions for our long-term success, simplifying how we work, bringing consumers closer to our strategic decision-making and enabling faster speed of execution in our markets. We've created a new Chief Growth Officer role with responsibility for bringing together category leadership, marketing and strategy.

We've also established a new global commercial excellence team. Together with R&D, they will lead our growth and innovation agenda, making strategic choices, priorities and trade-offs through the lens of our categories. And we announced the creation of 6 new operating units. They will be led by President, who all sit on the Haleon executive leadership team. These include high-growth markets like India and Latin America. This line of sight from category strategy to operating unit execution will be sharper and it will allow us to scale innovation across the business, support faster execution and growth across the board. At the same time, as Dawn mentioned, these changes will make us a more efficient organization.

I'd like to take North America as an example of the changes we are making through our new operating model alongside implementing a broader action plan to return the business to growth. First, in May 2025, I appointed Nathalie Gerschtein as our President of North America. She brings deep consumer experience and a track record of strong execution and of driving growth. Under her leadership and aligned with our new operating model, we strengthened our North America team, and we've invested in best-in-class capabilities in 2 critical areas, improving our net revenue management to drive distribution with key retail partners.

This includes putting in place a comprehensive program to drive both volume and value through optimizing consumer purchase occasions and driving a sharper focus on marketing effectiveness. We are building AI-powered tools to improve return on spend across our brands and channels. Early signs are showing encouraging results. Second, we have appointed new leaders in North America for our Oral Health, VMS and OTC categories. In partnership with our global teams, they will drive end-to-end category leadership from improving innovation, market competitiveness and execution. We have also established a cross-category growth platform team responsible for driving growth with opportunities such as GLP-1 support.

Third, we are doubling down on our efforts to scale innovations in North America faster and leverage the full strength of our portfolio to drive penetration. That includes making significant changes to drive an improvement in the competitive position of our pain relief and VMS categories. Take Advil, where our No Pain More Gain campaign is resonating with consumers. And in VMS, we are excited about the pipeline for Centrum with even stronger claims on Centrum Silver for slowing cognitive aging. Taken together, we expect these initiatives to deliver meaningful top line benefits as the year progresses, supported by effective market execution and new innovations, giving us confidence in returning North America to growth in 2026.

So to conclude, we're making good progress against our Win as One strategy to transform Haleon into a world-class consumer health company. While market category growth slowed during the year, we outperformed through the strength and scale of our trusted brand portfolio. We made excellent progress against our productivity agenda, driving strong profit growth. 2026 will be another important year for Haleon, and we remain confident in the opportunity ahead. Thank you for your continued support and interest in Haleon.

Good morning. Thank you for attending today's Haleon 2025 Quarter 3 Trading Statement. My name is Sarah, and I'll be your moderator today. [Operator Instructions]

I would like to pass the conference over to our host, Jo Russell, Head of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Haleon's conference call for our third quarter trading statement. I'm Jo Russell, Head of Investor Relations. And with me today is Dawn Allen, our CFO.

Just to remind listeners on the call that in discussions today, the company may make certain forward-looking statements, including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements.

Following Dawn's remarks, we will take your questions. For those listening to our webcast who would like to ask a question, you can find the dial-in details on Page 3 of today's press release. And with that, I'll hand over to Dawn.

Thank you, Jo, and good morning, everyone. We made good progress in the third quarter, driven by strong in-market execution and the continued rollout of our innovation pipeline, leaving us on track for our full year guidance. We delivered 3.4% organic revenue growth in the quarter with a good balance between price at 1.8% and volume mix of 1.6%.

Looking across the regions, we saw consistent growth and sequential volume improvement across EMEA and LatAm and Asia Pacific, with emerging markets in both these regions up 7% led by India and strong growth in a number of smaller markets, including Thailand and Malaysia.

In North America, despite the challenging consumer backdrop on consumption, we have outperformed the market each quarter this year, with particular strength in Oral Health, Respiratory and Digestive Health. Oral Health was once again the standout performer as Sensodyne continues to drive penetration with strong growth in a number of key markets, including the U.S., India and China.

In India, we are continuing to make good progress by expanding our reach through expert coverage, which is up 70% since the start of the year. And we are bringing new innovations, including Sensodyne Pronamel to market. Our Sensodyne offering for lower-income consumers is now in over 500,000 outlets across 10,000 villages.

From a strategic perspective, we are making great progress against our objectives as outlined at our Capital Markets Day. From a growth perspective, we continue to focus on driving category growth through innovation-led premiumization with a number of new market launches in Q3, closing the incidence treatment gap, an example is Otrivin Nasal Mist, which is seeing an over 80% repurchase intent amongst users and expanding reach to lower-income consumers with household penetration gains in India and Brazil.

We also continue to deliver against our value creation framework. Our supply chain productivity agenda continues to move at pace. We have made significant progress across service, cost and inventory. And since the beginning of 2024, we have reduced the number of our SKUs by 19%, and we have improved overall equipment effectiveness by double digit. This improves both gross margin and results in better working capital and improved cash conversion.

On A&P, we continue to invest at healthy levels as well as making progress on effectiveness and efficiency, where we are focused on improving both contribution to revenue and ROI. We are also continue to be disciplined in our cost base and are on track to deliver the remainder of our GBP 300 million target savings this year. All of this provides us with flexibility and agility in our P&L, enabling healthy investment in our brands and further strengthening our innovation pipeline to drive future growth. And finally, we are delivering on our capital allocation principles, having completed in the quarter the GBP 500 million we allocated to share buybacks for 2025.

Now let's look at the quarter in more detail. Organic revenue growth was 3.4%, balanced between 1.8% from price and 1.6% from volume mix. Volume mix saw sequential improvement in the third quarter in EMEA and LatAm and Asia Pacific. Reported revenue grew 0.7% in the third quarter, impacted by the drag from divestments of 2.3% and 0.4% from foreign exchange. It's worth bearing in mind that this is the final quarter with a drag on reported revenue growth from announced divestments.

Now let's look at the growth drivers, starting with our performance across the categories. Oral Health continued to deliver strong growth, up 6.9% in Q3. Growth was underpinned by innovation-led premiumization and geographic expansion. The key drivers of this were penetration growth in more than 80% of our major brand market combinations, high single-digit growth on Sensodyne, more than 2/3 of which came from volume and innovations, including the Sensodyne Clinical Platform and Pronamel Kids, and continued double-digit growth on parodontax, driven by innovation and our continued successful rollout in China. With exciting plans for continued innovations across our Oral Health business, the runway for future growth is strong.

VMS grew 4.9% in Q3 with double-digit growth in Centrum. Key highlights were premium innovations, including Centrum Daily Kits in China and Korea, strength in Philippines from increased distribution of lower-income consumer packs and expanding distribution of local brands such as Caltrate in Latin America.

In Pain Relief, we grew 3.7% for Q3. Panadol was up high single digit, underpinned by outperformance in U.K. and Southern Europe. Improved consumption in Voltaren, supported by innovations, including Voltamed, our new natural herbal product. Growth in these brands was partly offset by Advil. Whilst consumption continues to improve following the activation of new campaigns, performance was impacted by short-term supply constraint on Liqui-gels, which has now been resolved.

Respiratory Health declined 1.8%, lapping elevated COVID cases in Q3 last year. The impact of declines in Smokers' Health moderated in Q3 compared to Q2. Otrivin continues to perform really well with Nasal Mist bringing new consumers into the spray category in markets, including Sweden, Poland and the U.K. Ahead of the start of the cold and flu season, we saw the sell-in of cold and flu products in Q3 at relatively normal levels.

And Digestive Health grew 2.1%, including growth in Tums, thanks to innovations, including Tums Gummy Bites+, a strong performance in Benefiber from our Grow What Feels Good campaign and an improved performance from ENO in India. This performance overall was partly offset by a decline in Nexium.

And finally, Therapeutic, Skin Health and Other declined 1.1% with strength in Bactroban in China, offset by a decline in Fenistil from a weak mosquito season in Europe.

Turning now to the regions, starting with North America. In North America, we delivered organic revenue growth of 0.4%, driven by 0.7% price with volume/mix down 0.3%. In the quarter, we continued to drive market share with our consumption outperformance widening as we progress through the year. Organic revenue growth was driven by continued strength in Oral Health, driven by innovation, including Pronamel Clinical Enamel strength and successful activations, including Gum Expert on parodontax, a better VMS performance with Centrum growth and a strong performance from Benefiber and Tums. All of this was partly offset by Respiratory Health, which declined due to the continued weakness in Smokers' Health and from Pain with growth in Voltaren offset by a decline in Advil that I mentioned earlier.

As we shared at half year, we feel there is more growth to be had from our North America business. We are focused on a number of initiatives, which will drive stronger results. These include further strengthening our innovation pipeline, accelerating net revenue management through strategic pricing, price pack architecture and channel mix and reinforcing our relationships with partners through key activations. And collectively, these actions, combined with our focus on ensuring inventory is in an appropriate level by the end of the year, sets us up well to return to growth next year.

Turning now to Europe, Middle East, Africa and Latin America. Organic revenue increased 5.3% with sequential improvement in volume mix of 1.8% and price at 3.5%. Growth was driven by innovation-led premiumization across the clinical platform on Sensodyne Pronamel Kids and Otrivin Nasal Mist, a strong performance in VMS with Centrum up double digit, underpinned by a number of new launches, including Centrum Vital+ nutrient. And in Pain Relief, growth came from higher consumption of Voltaren and Panadol from innovation launches like Voltamed that I mentioned earlier.

Looking across the region, Europe performed well with particular strength across the pharmacy channel, which makes up the majority of our revenue in the region. Whilst category growth slowed, we continue to outperform given our innovation and excellent in-market execution. Latin America grew double digit, driven by Colombia and Mexico. This was partly offset by weakness in Brazil, given a softer macroeconomic environment impacting category growth.

And finally, turning to Asia Pacific. Organic revenue increased 5.1% with strong growth across India and Southeast Asia and sequential improvement in China. Across the region, volume/mix, which was up 4.4% and price was up 0.7%. With a relatively stable consumer market backdrop, we continue to drive category growth and expand our offering to lower-income consumers.

India delivered double-digit growth. This was largely driven by strength in Sensodyne as we further increase distribution and drive penetration. We expect continued strong growth in the fourth quarter, driven by our sales force investment and an improving macro environment.

Also in the quarter, China saw mid-single-digit growth with continued strength in Oral Health and VMS supported by key innovations, including Caltrate for Kids, Voltaren 2% and Fenbid Gold. Across China, consumers continue to invest in health and wellness, and we are well placed to capture on this trend given our focus on building trusted brands, closing the incident treatment gap and innovation-led premiumization. Our products are available across different channels, including pharmacies, hospitals and digital platforms, ensuring we can effectively serve a wide audience with different shopping habits. Digital has been a particular strength, growing 20% with our online to offline platform growing 25% and representing 1/3 of our e-commerce business.

We have now fully integrated the OTC joint venture and are realizing the benefits of a more efficient route to market. We expect growth in China to improve further in the fourth quarter, helped by distribution and increased investment in the faster-growing e-com channel.

Turning now to our 2025 guidance. We expect organic revenue growth of around 3.5%, assuming a normal cold and flu season. In North America, we expect growth in the second half to be broadly similar to the first half, with Q4 reflecting further action on inventory at slower-growing channels. We expect this to be completed by the end of the year.

In Asia Pacific, we should see an acceleration in Q4, driven by stronger growth in China and India. And in EMEA and LatAm, we continue to expect a good performance driven by Europe with market share gains, offsetting a slightly softening macro picture. And in Latin America, we are closely watching the macro environment given the consumer pressures in the region.

Finally, the pace of progress on our supply chain productivity initiatives provide a strong underpin to our expectation of high single-digit organic operating profit growth.

So in conclusion, we delivered a good performance in Q3 and remain on track to deliver our full year guidance. We are pleased with the actions we are taking in the U.S., which sets us up to return to growth next year. We're continuing to invest behind our brands to build flexibility and agility in our P&L by unlocking productivity savings. Altogether, this should give us confidence in delivering against our value creation framework and our medium-term guidance.

Now let's turn to questions. Operator, please, can you open up the lines?

[Operator Instructions] Our first question comes from Guillaume Delmas from UBS.

2 questions for me, please. The first one on North America. Dawn, I was wondering if you could talk a bit more about your performance in the region in the third quarter, which was clearly better than expected. I mean, what were the main drivers behind this sequential improvement? And were there any one-offs restocking benefits we should be aware of that may have flattered your performance in the region in Q3? And still on North America, looking ahead, so your guidance for the second half to be similar to the first half seems to suggest around minus 1% organic sales growth in Q4. So maybe if you could talk a little bit about the reasons for this anticipated slowdown sequentially? And last question on North America. I know it's early days, but for 2026, what would be your expectations? Because looking at the last 3 years, you've been growing by an average of, let's say, 1.5%. Wondering if your ambition is to materially accelerate next year versus this 1.5% run rate?

And then the second question, shorter one, I promise, on Asia Pacific, strong but decelerating sequentially despite India being in double digits. So it would be helpful if you could shed some light on the main moving parts behind this slowdown. You sound confident about a Q4 uptick. Do you think you can maintain this momentum going into 2026?

Thanks, Guillaume. So let me take your 3 questions in turn, and I'll start with North America. So as we said at the half year, we expect half 2 to be broadly similar to half 1, and we're tracking in line with our expectations. As we know, it's a challenging environment in the U.S. We have outperformed the market in terms of consumption every quarter this year with particular strength across Oral Health and Digestive, and that gap has actually widened as we've moved through the year. Obviously, in our results, that's been masked by the inventory movements, the difference between sell-in and sell-out as retailers have managed their inventory and working capital.

And if we look at Q3, there's a few moving parts. So of the 220 basis point swing from Q2 to Q3, there's 2 main things to call out. The first one is the drag from Smokers' Health has halved. So in Q2, this was 160 basis points drag. In Q3, it's now 80 basis points drag. And the remainder of the difference comes from better performance in Oral Health and Digestive Health, as I mentioned.

If we then look forward to Q4, if we're working on the assumption that we expect half 2 to be broadly similar to half 1, that implies, as you said, around about a 1% decline in Q4. and that reflects tough comparatives from the prior year. Obviously, we're lapping the launch of Eroxon, and we have some further action to do inventory.

So I think when we look towards next year, as I said, we expect the region to return to growth. You talked about where it had been historically. We would expect to get back to that level. I think as I referenced in the overview, we feel really good about the actions that we're taking in North America. Obviously, next year, we won't have the drag between sell-in and sellout. We would expect that to be -- we would expect that drag to kind of disappear, but as I said, I think with Natalie, I mean, Natalie is bringing deep consumer expertise and execution. We are focused on net revenue management, got new innovations coming to market. So I think we feel good about return to growth next year.

So if I step out of North America and the U.S. and talk about Asia Pac, I'd say, overall, we're really pleased with our performance in Asia Pac. We've got double-digit growth in India. We've got mid-single-digit growth in China. And actually, in those markets, we continue to perform incredibly well. Yes, we are lapping some phasing in the prior year in terms of North Asia, particularly given the price increase phasing that we put through in Japan last year. But actually, given the momentum in that region, given that we expect the macro environment to improve in India in Q4 on the back of GST and on the back of tax changes as well as our activations and expanded distribution, I think we feel really good about that. And I'd say the same in China as well.

And Dawn, just to follow up and to confirm, so no one-offs in the third quarter in your performance in North America?

Yes, I wouldn't say that. I mean I'd say in Q3, that's the quarter where we sell-in ahead of the season. So we're obviously shipping in, in terms of the season. We have a price increase that goes live early November in the U.S. So -- but I guess, quarter 3 is still -- there's still quite a big time lag between those 2 pieces. And if you remember, in terms of tariffs, we always said that they were in the low tens of millions, and we're taking supply chain actions to mitigate that. The other piece, obviously, that we see is the pricing action that we're taking.

Our next question is from Olivier Nicolai from Goldman Sachs.

Just 2 questions, please. First of all, at group level, you had a strong pipeline of innovation across many categories in this year in 2025. Looking at next year, how do you see the strength of the pipeline? And is there any Rx to OTC that we should expect as well for full year '26?

And then just going back to your guidance, I know it's early stage, but you did mention that you assume a normal cold and flu season. I know that the U.S. does not provide data at the moment. But perhaps anecdotally, how do you see things for the coming cold and flu season?

Yes. So let me kind of take the innovation pipeline question first, Olivier. So as I said, across actually all of our categories, we've seen real strength in terms of our innovation pipeline. From an Oral Health perspective, the Clinical range on Sensodyne continues to perform really well in terms of bringing new users into the category. We're actually gaining or holding share in more than 80% of our brand market combinations on Sensodyne. And actually, if you think about on Clinical, we've got 5 variants. On average, you've maybe got 2 of those variants in the market. So actually, there's huge, huge runway in terms of Oral Health. I also talked about Nasal Mist in terms of respiratory, in terms of Otrivin Nasal Mist. We are -- that innovation is recruiting new users into the category. I referenced purchase intent is now over 80%, and we've obviously got further rollout behind that.

And maybe just to mention another one in VMS. So on Centrum, we have a new claim in terms of slowing cognitive aging that we've just launched as well as Centrum Essentials and Daily Kits. So actually, across all of our -- I could talk about that across all of our categories. We have an incredibly strong innovation pipeline that's actually performing really well, not only for us, but it's also growing the categories where we've launched it as well.

I think from -- in terms of switches, we've always said that, that would be on top. We don't need switches in terms of our growth forecast. So I would focus more on the innovations that I've talked about in terms of driving growth. We have 2 that we're progressing, but I mean, it just continued -- it continues to progress. I wouldn't take that into account in terms of our growth at the moment.

I think if we look at the second question, your question in terms of cough, cold and flu and our guidance, I mean, it's fair to say we have a great portfolio in cough, cold and flu. It's an attractive and relevant category for consumers. As you know, it's more seasonal. We have shared in the past, you'll see in the appendix, we've shared our normal chart that we show for the U.S. in terms of incidences. What you will see from that chart is obviously no 2 years are the same. It depends on the size of the peak and the timing of the peak. Sometimes it can be in Q4, sometimes it can be in Q1. if you remember, about 1/3 of our business for cough, cold and flu is in North America. We've got about half in EMEA, LatAm. And the thing I would say about that is the variability of when that peak happens and the size of the peak, that's the variability around the -- around 3.5% guidance for the year. So we plan for a normal season, but we obviously stay agile from a supply chain point of view in terms of is it better or worse.

Our next question is from David Hayes from Jefferies.

Just going to follow up on Guillaume's question if I can, in the U.S., just to sort of maybe quantify or get the dynamics a bit more. So just to be clear that you're saying there wasn't really any prebuying into the price increases that you've taken in oral and cough and cold in the quarter. Is that a fair summary?

And then just in terms of the channel dynamics, can you talk us through maybe the growth rate comparisons in new channels, if we call them that like Amazon and Walmart versus the pharma channels? And is there an element of as the shift continues to happen, Amazon and Walmart are stocking up more as they're getting more of the market? Or is there no really offset in that sense?

And then the second question is just on the supply chain cost savings all running to plan and very extensive. Is there any incidence or evidence that, that affects the service levels, the sales performance at all? Is there an inevitability that as you go through some of those changes there are some hindrances that will dissipate? Or would you say it's a completely separate dynamic?

Yes. David, so I think I obviously talked about the pricing piece coming early November. Let me talk a bit more about some of the other moving parts in terms of inventory and the channel dynamic. So as you know, we work closely with our retail partners on inventory levels. There isn't a one size fits all, and it obviously depends upon consumption. So for example, in the drug channel, our inventory is down double digit compared to this time last year. But obviously, in faster-growing channels like [ decom ], Actually, our inventory levels have increased, as you would expect on the back of more traffic and stronger consumption trends. And just to say there's obviously more work to do in Q4 on inventory, as I referenced. And our objective is to exit the year in a clean place on inventory and obviously grow on the back of that next year.

I think from a channel dynamic, I mean, we continue to see really strong growth in the U.S. actually on digital. We're growing kind of double digit on Amazon. And I think we continue to partner really well.

In terms of your other question, in terms of supply chain, I mean, as I talked about in the brief, we're actually making progress across service cost and inventory. And the reason that we're doing that, a, we're working closely with our customers, but also we're rolling out new supply chain, new systems and processes in terms of improving our forecast accuracy. And that's also helping us not only to reduce inventory, but also to improve service.

Our next question is from Jeremy Fialko from HSBC.

I know we've had quite a lot on the U.S. But I wanted to ask one more, but more a general question on the consumer because it feels like it's a very bifurcated environment where you've got certain things that are doing well, certain things that are struggling. So perhaps you could sort of break your business down a bit and explain from a consumer standpoint, which -- what stuff is going well, what things are going badly and why that's the case?

And then secondly, you could talk a bit more about China. As you say, you're kind of most of the way through this merger of the sales forces from the 2 businesses that you bought together. So perhaps you could just talk about the progress that you've made there and how you think that you can be more effective over the coming quarters as a bigger combined organization?

Yes. Thanks, Jeremy. So let me talk about the U.S. first. So I think from a consumer perspective, I mean, we have seen consumption in the market track down this year. As I said, we are outperforming the market on consumption, and that gap has widened. So in Q3, we're outperforming around 100 basis points versus the market. So I think we're tracking well.

I think from a consumer perspective, what's important for us is that we are across all channels, which we are so that we are where consumers are shopping. We have seen types of behaviors that we're seeing. We're seeing consumers buy either larger packs where the unit price is lower. We're also seeing consumers buy lower price point packs, for example, from dollar stores. So we are seeing them adjusting their purchasing behavior across the piece. And as I said, what's important to us is that we are across all channels so that we can cater for that behavior and also that we have a variation around our price pack architecture.

In terms of China, I mean, we're really pleased with the joint venture. We have integrated the sales force. That means that we are able to optimize our visits to retailers. It also means that we are expanding our distribution to more tiers in terms of cities in China. And we continue to invest in that space. And I'd say I referenced it in the brief, we are across all channels in China. And we're actually outperforming the market across every channel. So I think there's a real underpin in terms of excellence in execution in that market.

Our next question is from Celine Pannuti from JPMorgan.

So I have 2 questions, but I'm sorry, I just want to clarify something on the U.S. So first of all, thank you for providing clarity on Q4 expectation. But just to put it simple, you basically are guiding at minus 0.5% for the U.S. this year. And I think sellout is somewhere between minus 1% and minus 1.5%. So -- and you're saying that you are -- so like it seems that your sell-in has been better than your sellout, yet you talk about easy stock levels for next year. So I just want to understand this part.

And then my 2 questions. First, on Latin America and EMEA. If you can talk about the pricing evolution. We've seen that pricing has been a bit weaker and you were commenting about softness in consumer there. So we've seen sequential pricing deterioration. Should we expect that to continue? And maybe as well, whether that pricing in APAC, you were mentioning lapping Japan would improve or not in the fourth quarter. So that's on pricing.

And then my second question is on the outlook for the year. So if I look at what you said for Q4, minus 1% Europe, U.S., EMEA, good and then an acceleration in APAC, I get to a growth rate that's lower in Q4 versus the 9 months. Is that the right level?

Yes. Let me take the -- I'll take the middle question first in terms of pricing. I think what we always see when we see a softer consumption environment, there's always the competitive pressure increases, the promotional activity increases. And as I talked about, we see a shift in terms of consumer behavior, either buying larger packs, cheaper unit price or smaller packs in terms of smaller initial outlay, and that obviously impacts pricing.

The other thing I would say is actually in EMEA, LatAm, we have seen sequential volume improvement this year, which I think is good. The other thing to say is whilst we are seeing softness in consumption, actually, in Europe, we're pretty resilient. I'd say we're holding our own and Oral Health is the one category that is seeing -- that is not seeing the same level of softness. And the other thing to say in Europe is given our strength in pharmacy channels, we're also -- we've also got the resilience around that as well.

I think when I look at the outlook for the year, I talked about an acceleration in Asia Pac, particularly in India and strong continued growth in China. In Europe, I talked about challenging consumption in some categories, but actually a resilient performance from us in terms of holding up. LatAm, we're obviously looking at -- we're obviously monitoring the macro environment. Whilst we had a good performance in Q3, driven by Colombia and Mexico, that macro environment, we're watching that closely. And obviously, I've talked through the moving parts in North America. And what's important there is that half is broadly similar to half 1.

In terms of consumption in the U.S. and sell-in and sell-out, I think what I would say is we said at the beginning of the year, we had roughly 200 basis points difference between sell-in and sell-out. We've seen that gap narrow as we progress through the year. And as I talked, that's been different across different channels depending upon the consumptions in those channels.

I think the other thing to say within that, I mean, Oral Health continues to be strong consumption. We continue to see strong growth. And in decom, I talked about our continued strength. I mean, our top 18 brands that, for example, that are on Amazon, 16 of those, we have a higher share online than we do offline. So I think that reflects the strength in that channel. And as I said, Q3, we always have the sell-in of cough, cold and flu. But as we look to Q4, we want to close that final gap in sell-in, sell-out. I probably think about that depending upon consumption is probably broadly another week, I think, to come out. And as I said, what's important for us is that we exit the year clean and that we return to growth in North America next year.

Our next question is from Karel Zoete from Kepler Cheuvreux.

I have a follow-up question with regards to the contribution of innovations in the third quarter and how that might look going forward because you highlighted a lot of things that you're enthusiastic about, part already answered on it. But can you quantify a bit more the contribution during Q3, some of the listing of it? And then how that might develop in the quarters thereafter?

And then the second question is on Pain. The Pain franchise looked better, but the U.S. was quite soft. So can you speak about your Pain franchise, what goes well? And how should we look at the U.S?

Yes. Let me take the pain question first. I think, look, we talked about Advil. We launched our No Pain, More Gain campaign in July this year. That has -- we have seen improvement in some of our key metrics. So purchase intent is up. The messaging around relevancy is also up and actually ahead of the benchmark. Yes, we did see some supply issues in the third quarter in terms of Advil Liqui-gels, but that has now been resolved. And I think on Advil, what I would say is, whilst it's early days, we are seeing green shoots in terms of some of the metrics on Advil. And I think that should give us confidence, but it is early days.

I think when we look at innovation, I talked about it. We had a number of new market launches in Q3. That's making a good contribution in terms of our growth and market expansion. I talked about some examples earlier in terms of our Clinical range, Otrivin Nasal Mist. If I give some others, I mean, across pain, if I reference pain a bit more, I mean, Voltaren and 2% in China, our natural Voltamed products in Germany, and also on Panadol in terms of whether it's Dual Action or whether it's our Panadol Four Count in Indonesia.

So actually, what you see is across every category, innovation plays a really important role in our growth strategy, not only in terms of reaching lower-income consumers, but also in terms of driving premiumization through innovation. And I think that the science and the strength of the product differentiation is also what's setting us apart in terms of driving growth. So this is a really important growth lever. The contribution to growth varies across the categories. but we have significant headroom in terms of continued rollout across all of the pipeline of innovations that we have.

Our next question is from Ms. Misha Omanadze from BNP Paribas.

I have 2, please. So the first one would be on how you view the category in general terms. From the moment that Haleon came to market, you were saying that consumer health is relatively insulated from down-trading pressures. This is a category where brands matter a lot. Has 2025 and particularly the U.S. market, the evolution there changed your view in any sense on this category being not so much affected by down-trading?

And I guess a follow-up question on that is that do you -- in the plus 4 to 6 medium-term growth target, has the regional composition of your growth expectation changed compared to 2022? Do you expect less growth to come from North America and more growth to come from the other 2 regions or not?

Thanks, Misha. So I think -- look, I think in terms of consumer health and in terms of our categories, I mean, there's incredible growth opportunity across all of our categories that we talked about at Capital Markets Day, whether it's broadening our reach to lower-income consumers, whether it's driving premiumization through innovation or whether it's closing the incidence treatment gap. So I think we continue to see huge headroom in terms of category growth. Consumers are increasingly more aware in terms of health. They're more focused on health and improving kind of daily lives in terms of health. So I think that continues.

I think I would say also compared to other categories, we are a lot more resilient. I mean you see that. And if you think about Oral Health, it's been pretty resilient this year, in particular. Obviously, we're not immune to the macro environment, of course, that will have an impact. But I think what's important is the relative resilience versus other categories that's important. So I think that would be one thing to say.

I think in terms of our regional expectations, I mean, we continue to see runway in terms of emerging markets growth, and you see that in our performance. In terms of North America, the size of the North America consumer health market, the consumer trends that underpin it, we do see growth potential in North America. We have said that we think there's more runway to go in terms of what we've seen versus our historic performance, and that is the proactive actions that the team are taking to ensure that we unlock that growth and that it plays an important role in terms of our 4% to 6%. So I think we feel really confident in terms of our medium-term guidance of 4% to 6% growth.

Our next question is from Tom Sykes from Deutsche Bank.

Sorry, I'm going to flog the U.S. horse again. But just in terms of the drag from the drug channel in Q4 versus Q3, are you expecting that drag to be similar? And then in terms of the budgeting for next year on the drug channel, are you saying that your inventories are in the right place for the existing drug channel footprint? Or are your inventories below where they would normally be because you're expecting the drug channel sellout to be worse next year?

And then, please, just on China, sorry, I may have missed what the offline, online exposure you have is -- and sorry, whether you gave the sort of old e-com versus sort of the live streaming new e-com split, if it's possible to have that, please? And just are you targeting 11/11 in a different way to last year because that seems to be quite important to the Asia Pac or China pickup, please?

Yes. Let me take the China first. So as I talked about, we are present across all channels in China. E-com represents broadly 1/3 of our business. Within that, in terms of the different parts of that channel, obviously, Douyin, we're growing -- that channel is growing very fast and we are growing incredibly fast on the back of that.

Online to offline actually also continues. We have strong presence there. That also continues to drive strongly double-digit growth and the same on e-com. So I think we're across -- we see growth across categories, driven by innovation on parodontax and VMS in terms of decom in China. And I think we're well placed to unlock that growth.

And in terms of 11/11, you're right, it is an important event. It's a good growth driver. We are increasing our investment in that -- in the quarter. And that is one of the reasons that underpins our confidence in terms of Q4 growth in China.

I think in terms of the U.S., I mean, I talked about it. We're working closely with retailers across every channel in terms of ensuring that we exit the year with the right level of stock so that we can grow next year. Obviously, it's not an exact science because it depends on consumption. But I think what we're demonstrating is that we're working closely. We're being agile to what's happening in terms of the different dynamics.

The other thing I would say is this dynamic is not new. We have been dealing with this dynamic for a number of years quite successfully, and we'll continue to work with that dynamic in terms of where we're seeing stronger growth in some channels and where we're seeing less growth in other channels. And as I said, I think what's important for the U.S. is that we expect to see a return to growth next year.

Yes. And sorry, Dawn, just on that, just the drag from drug Q4 versus Q3, is that viewed as being similar in the U.S?

Yes. I think as I referenced earlier, in Q4, we still got more work to do in terms of ensuring that inventory lands in the right place. And I talked about depending upon consumption, the way to think about it is broadly another week to come out in terms of inventory.

Our next question is from Warren Ackerman from Barclays.

It's Warren here at Barclays. So I got kicked out for a little while, so I didn't catch everything that was being said. But can I just clarify a couple of things. On the Oral Care business, the 6.9% in the quarter, that was a bit lower than consensus, Dawn. Is there anything weird going on with Aquafresh and the Denture business outside of Sensodyne that's worth calling out this quarter? That's the first one.

And then secondly, are you able to say something about the kind of promo environment that you're seeing in, say, U.S. VMS and maybe in Germany, our data is showing both are ticking up quite substantially. Just wondering whether you've got any comment on that?

And then just finally, on the inventory side of things. You said that the -- and again, you might have answered this already. You said that you're outperforming the market in the U.S. by 100 bps. I think you said the 100 bps. But we can see that the U.S. sell-out this quarter is down 1.5%. So if you're outperforming by 100 bps, are you saying that the U.S. market sell-out this quarter is down 2.5%? And if that is the case, are you able to maybe highlight why -- where the market in the U.S. has slowed sequentially? I'm still not 100% clear on that piece.

Yes. So let me talk about Oral Health. I mean, I think you're right, we have seen a softer performance from Aquafresh, from Denture Care. And obviously, we're lapping the phasing pricing from the prior year in Japan. But as I said, I think we feel really positive about Oral Care. We're performing incredibly well. Yes, in markets, as I talked about, where you see increased competition and promo, we're seeing some of that, particularly you referenced VMS. So when consumption is soft, competitive intensity increases and alongside that often promo increases, we are seeing that in VMS in the U.S.

In terms of the inventory piece, I mean, yes, you're right. The consumption has continued to drop in North America. So the number that you quoted in Q3, that would be broadly consistent with what we're seeing. And as I said, we are outperforming the market by around about 100 basis points in the quarter. The main drag that's coming from -- I mean, you talked about it. VMS, we're seeing increased promo. That's one of the main reasons why the category is coming down.

The other category to talk about would be Respiratory because if you remember, we're lapping a COVID spike last year. So I think between those 2 categories, they're probably the biggest drivers in terms of why would the total market consumption be lower in Q3 or worse in Q3 than Q2. But as I said, in terms of our performance, we continue to outperform in terms of consumption and that outperformance has improved every quarter this year in the U.S.

Okay. Can I just clarify one other thing, Dawn, just quickly. So just sell-in, sell-out thing. So the sell-out, we think or we can see was down 1.5% this quarter on the scanner data, but you printed 0.4% organic growth. So that looks like a 200 bp restock compared to a 200 bps destock in the first half. So sequentially, that's 400 bps. And that includes the pharma destock. So if you actually look at the kind of gross restock, it's probably even higher than 200 bps, maybe 250, 300 bps. And you're saying, I think that a lot of that is not one-off. It's due to the fact that your inventories are naturally going up more in the faster-growing retailers like Amazon. So can you just clarify that, that actually that is the case rather than there's been buying ahead of pricing or any kind of weird kind of really early ordering? I'm just -- I'm still not quite clear on that piece.

Yes. I think there's a couple of things to say. I mean I referenced that different channels were in different spaces. I talked about we reduced inventories in drug channel versus the prior year. And we've also seen an increase in inventory in growing channels like Amazon, which is up double digit in the quarter.

The other thing to say, obviously, in Q3, you've got the sell-in of cough, cold and flu. And I think that muddies the water a bit in terms of sell-in and sell-out. And obviously, as that stock sells through as we progress through Q4 and then obviously, depending upon the season, then we'll see the restock.

But I think the important message around this is that we are making progress in terms of reducing the gap between sell-in and sellout. We expect to finish the year in a clean position, and we expect North America to return to growth next year.

Our next question is from Edward Lewis from Rothschild & Co Redburn.

Just 2 quick ones for me, I guess. Just looking at volume/mix growth in Asia Pac, I think it was up 4.4% this quarter on the 7.1% growth in the prior year. I guess there would have been some headwind potentially from GST in India. So it'd be interested to hear, Dawn, just sort of the difference there between sort of volume mix breakdowns.

And then just on the SKU reduction, I see that's down to 19% now against minus 16%. I think it was in H1. How much impact would that have had in the quarter on volumes, if any at all? And is that -- do we expect more SKU reductions going forward?

Yes. So if I take the volume/mix question first in Asia Pac. I mean, if you look historically, 3/4 of our growth, 2/3 to 3/4 of our growth in Asia Pac is volume led. So I think it's a strong quality growth, and we continue to see that. And that's an important piece in terms of reaching lower-income consumers, broadening distribution. And that is driven by India and China, and we see double-digit volume growth in China.

In terms of the SKU piece, you're right, we are making really good progress on this. And that is a key driver in terms of our productivity agenda. What we are doing as part of that exercise, whilst we are reducing the number of SKUs, what we're also thinking about is how do we ensure that for the consumer and for the shopper, a few things. One is that we have the range of our portfolio in terms of the consumers want. The other thing that we're doing is ensure that we're improving the shopability of our displays and our products are easier to find on shelf. So yes, there's an efficiency play with the SKU reduction, which is helping to take cost out, remove complexity in our supply chain, reduce inventory. But there's also a consumer benefit in terms of shopability, improvement on shelf and being really clear in terms of what are the range of our products.

So I'd say from a volume perspective, I think we're managing that really well. And as we're taking SKUs out, what we're seeing is increased sellout of kind of our main runners or our top SKUs, which is what you would expect to see.

And I think in terms of GST in India, actually, we didn't see a negative impact from that. It's an incredible job that the Indian team have done in terms of managing the execution of this across all of our packs at short notice. It's a reflection of the close partnership that we have with our customers, with our distributors and the team have managed it incredibly well. And as I said, we would expect that -- we would expect the benefit from that in terms of consumer offtake as we move into Q4 and as we move into next year as well.

We have a follow-up question from David Hayes from Jefferies.

I'm going to just flog this North American horse one more time, if I can. Just in terms of the -- just getting into the fourth quarter guidance of minus 1% and some of the context that you said. So broadly speaking -- I know I'm trying to simplify it probably too much. But broadly speaking, is the assumption that consumption will be basically flat year-on-year and then the 1-week reduction in the pharma channel will be, let's say, 100 basis points of headwind, and that's how you get to the minus 1% if you're thinking about the offtake shipment levels. Is that broadly the picture?

I think consumption is quite difficult to call. And I think there's a few moving parts. The first thing is, obviously, we've got a price increase, a modest price increase going live early September. We obviously need to see how the season plays out. We've talked about the variability in the cough, cold and flu season. And what we've said is globally on a full year basis, that could be -- in terms of the variability, either side of a normal season, that could be in the region of 50 to 100 basis points. So I think that that's probably a big swing factor. I think you've got the price increase.

We could assume in that number, no change in consumption. But honestly, depending upon what happens with cough, cold and flu, as I talked about, there could be some variability around that. And as I said, I think the important message on North America is that we expect to end the year with clean inventory levels and get North America back to growth next year.

We have a follow-up question from Warren Ackerman from Barclays.

Again, it's Warren here. Just on pricing, are you able to kind of indicate to us, Dawn, roughly when your pricing lands in North America, how much pricing you're taking and how you feel your pricing timing, I guess, relative to peers? And are you building in any kind of elasticity assumptions on the volume elasticity assumptions on that pricing that you're taking? That's just one follow-up.

And then second one, you may have mentioned this already on Brazil, did you break down or can you break down what you're seeing in Brazil by category in terms of like the market is obviously slower, but is there any kind of specific kind of category call-outs where you're seeing kind of more local competition or any other kind of sort of change in trend in that country?

Yes. I think in terms of the pricing, so as I said, the pricing goes live. It's effective at the beginning of November. It's across parts of our portfolio. It's kind of -- it varies across SKU, but I'd say kind of low single digits. It's mainly across Oral Health and cough, cold and flu. I think we -- given that the market has moved and others have taken pricing, it's hard to call on elasticity. But I'd say given that the market is moving, then you would expect to see a lower level of elasticity. And as I said, the strength of our brands, so why do consumers buy our brands, they're buying it in terms of the science, the strength of formulation and the differentiation in terms of the delivery of our brands. And obviously, the pricing is related to tariffs. As I said, we're mitigating the tariffs through supply chain initiatives and then there's a small amount of mitigation coming from price.

If I think specifically about Brazil, I mean, it's well documented in terms of the macro environment in Brazil, in terms of interest rates and the challenge for consumers. I think in Brazil, we have a strong performance. We're outperforming the market in terms of pain and VMS, but the market is soft. I think the area of weakness is specifically coming from EO, actually, in Brazil. But as I say, I think across LatAm, we have a strong performance in Q3, up double digit. We continue to outperform, but we are watching the macro environment in LatAm because it is changeable. But I think long term, LatAm remains and will remain a key growth driver for us.

There are no questions waiting at this time. So I'll turn the conference back over to Dawn Allen for any further remarks.

Okay. Well, thank you, everyone, for your time and interest in Haleon. We look forward to meeting a number of you at our up-and-coming conferences. Our next formal update will be our full year results in February. If you have any further questions, please contact our Investor Relations team. Thank you.

Thank you.

Let's kickoff with the second session today. So welcome, everybody. I'm delighted to welcome Brian McNamara of Haleon. Good to be here on the stage. Thank you for supporting us every year, Brian. We appreciate making the effort with us. Same format as before, 35-, 40-minute questions.

And I want to kick off, Brian, just with guidance. I mean, you lowered your full year guide from 4% to 3.5%. Can you explain the moving pieces that led you to that decision, as the guide was already second half weighted? And even with the lowered guide, you still assume a step-up in the second half. So just what underpins your confidence to the 3.5% is the absolute minimum, you'll deliver? And could it still actually get closer to 4%, if you have a good cough/cold season, because there was no season virtually last year. So just on that 3.5% number, your conviction that, that is the floor.

Well, first of all, I think if you step back and look at what we said at half year, we did do two things. We took down sales to around 3.5%, and we took up our profit guidance to high single digits on an organic basis. And I'm sure we'll talk about that later, but that's really underpinned by this productivity program really coming through very strongly and giving us a lot of confidence.

3.5% -- To be very clear, it wasn't 3.5% per se. Listen, halfway through the year, we're at 3.2% growth. And certainly, in the U.S., we were down slightly. And if you look at the U.S. consumption in Q3, we were up roughly 0.5 point in consumption. The market was roughly down 0.5 point. Now market was up much more in Q1, and so were we, and that was the seasonality effect.

So as we looked at the U.S. environment, two things are happening. We're seeing a bit of a muted overall market growth environment. And we're also seeing continued pressure on the inventory levels. So given all that, we decided to change our guidance to around 3.5%, not expecting, honestly, the U.S. for the balance of the year to change that much from a net sales perspective.

We think there's continued inventory pressure in the U.S. We want to get much more proactive in managing that with our retailers, because, frankly, you can get to the point also where you can start seeing out of stocks and some challenges on shelf. So we want to get more proactively managing it.

And if you also remember last year, in Q4, cold and flu in December was down 10% from a consumption basis, which ended -- which meant that inventories were kind of high at year-end also. So we want to make sure that we end the year in a healthy place in the U.S.

On the balance, if you look at the balance of our portfolio, we grew mid-single digits, both in EMEA, LatAm and in Asia Pac. And we do expect to see some acceleration in growth and consistent growth in those two regions. And the combination of those two give us the confidence in the around 3.5%, but certainly not counting on a big change in the U.S. trajectory to get there.

And can I maybe touch on volume, because one of the big features from results season is investors are super focused on volume. Do you -- is there enough focus, Haleon, on the volume mix? You talk a lot about the 4% to 6% organic growth. And some of your peers are targeting 3% volume growth. But if I look at your volume mix since spin, and I track it since then, it's been tracking at around 1, mid-1s. And it's been quite driven by Asia with volume mix quite low in the U.S. and Europe. So within the 4% to 6% guide presumably, the vol mix would need to be at least 2% or even higher.

And so my question is, is the top team incentivized enough on the vol mix? Or do you need to make a bit of a pivot between organic growth and vol mix or are you happy with the balance?

Yes. So just as a team, we're very focused on volume. Volume has such a big impact overall on a lot of things, cost structure, manufacturing sites, all that kind of stuff. If we think about our guidance of organic growth. We always said we expect to see a relative balance between volume mix and price.

So if you think 4% to 6%, 2% to 3% volume mix, 2% to 3% price now. I've always said what's balanced 60-40, 40-60. I mean, and it's not a super exact science in any given year. It can fluctuate a little bit. So I honestly don't really have a desire to get into very specific guidance on volume mix versus price and all that, but absolutely focused on it. We track it. we look at it. Also, if we take a step back and see what we laid out for our Capital Markets Day, reaching 1 billion more consumers.

A lot of that is the opportunities we have with the low-income consumer in emerging markets, and we're starting to see some, some of that launches are happening. It's a bit of a slower burn, but that's a volume play also. So it's very much a big focus for the team and I, and we track both price and volume mix and are very rigorous about that.

And just digging into the destocking, I think it was a minus 2% in both Q1 and Q2. What's your assumption on destocking in the U.S. in the second half? Because I've seen some of your peers talking about the difference between sell-in and sell-out of minus 4%, minus 5%. What -- you talked about visibility. What visibility do you have on retail inventory? And is there a risk that it becomes a bigger headwind as the drug stores lose share to retailers that have better inventory management, such as Walmart or Amazon. So within your guide, are you assuming the minus 2% continues? Does it get a bit worse, a bit better? Where are we on your -- how much visibility on that particular point?

Well, first of all, from a visibility perspective, we have very good visibility on inventory. Certainly, with our top 10 customers, extreme visibility. And that's the vast majority of our business. And we have visibility below that, too, but we partner with our retailers.

I think you're right that there, if you look at our business and our portfolio, we have more business in a Walgreens and maybe CVS type of retailer than someone who's in different consumer staple categories, by the nature of the categories we're in. That's a reality. They tend to hold higher inventory levels. We do believe that the inventory reduction we saw in the first half and that gap will continue. We are not seeing those numbers swing higher. So -- and that's what we're assuming.

And what we need to do is we need to get -- and we are getting much more proactive to partner to do that, because one of the challenges is Walmart, Amazon, Dollar, Club are very good at inventory management. The drug channel just had a different bit of an operating model. The risk is, inventories get lower, and then it results in out of stocks in the store, because the systems don't quite support the inventory levels they have. So we're very conscious of that. We have teams on the ground and that partner with all our big retailers and certainly those.

So in the balance of the year, we want to proactively manage that better than maybe, and everyone has been a little bit surprised by it at this point. We see that there's going to be more pressure there and more opportunity. We want to proactively management. And that's in our guide for the year.

And in terms of consumption in the U.S., you were 3% in Q1, you were at 0.5% in Q2, the market was a minus 0.5%. Can you break down why did the market slow from 3% to 0.5%. Is it smokers health? Is it allergy? Is there any reason to think it doesn't naturally come back to the usual 2% to 3%? I guess you think it's mostly cyclical. Are there any elements that potentially could be structural?

Yes. I think it is more cyclical. I think if you just break down what happened in Q1 versus Q2. In Q1, what you saw consumption-wise, was a high cold and flu season at the end of the quarter. And we are a seasonal business, and we are impacted by that. So that really drove that kind of higher growth in Q1.

So you come to Q2 and allergy season was lower. So you lose the tailwind of the cold and flu, because when you get into April and May, that kind of goes away. And then allergy season was a bit lower. And I think that's the natural dynamic on the business.

Smokers health, we've talked about. That is a category that certainly is under more pressure in a $30 to $40 price point kind of range for consumers that are really under a lot of pressure and feeling it, it's a much bigger choice than, let's say, an Advil at $5 or $6.99 or Sensodyne kind of thing.

The one thing that's been consistent throughout, I have to say, has been our oral health performance, which has continued to go from strength to strength. We continue to grow share. We continue to see good consumption growth. And that is a category that we're seeing in the 3% kind of growth range, but being in therapeutic oral health, where we're much higher than that, and we're growing share in a healthy way.

Just want to touch on smokers health, I think it was down 20% in the quarter and the minus 1.7% you had in the U.S. would have been almost flat. So for the second half, should we assume that the down 20% continues at that run rate? Or I think you've got new innovation coming, might help a little bit. What should we think about in terms of the drag?

Yes. I would expect that it's going to continue to be a drag, but not that level of drag. So there were some unique things that happened, some things in the base. But in the end, we believe we have plans that can help stabilize that a bit. We also do have a new innovation. It's a lozenge. FDA approved. So there won't be private label on that. It's a flavored lozenge, stops cravings within 3 minutes.

We're launching on e-com in the back half, and we'll do a full launch next year. So we have reason to believe we can get that business more stable. It's never been a big growth driver business for us, but it is a good business. It meets a real unmet health need. And we are -- we believe we can get it to a place where it can play the role it needs to in the portfolio.

And just maybe following up on channel mix. You mentioned you're maybe slightly overweight the drugstores. But how are you executing with the growing retailers like Amazon, like Costco, like Walmart? Do you need to do anything around strengthening those relationships in terms of execution, in terms of category management, in terms of supply chain, data merchandise? I don't know what it is. Are you happy with how you're executing with the growing retailers?

Yes. Listen, we have very good partnerships with all of them. And Walmart, Amazon are our top 2 customers in the U.S. We have teams on the ground like every other CPG company or consumer staples company in those locations. Very good business at Club, very good business at Dollar. So it's not an issue of -- the channel shift isn't going on for years. It's a bit exasperated, because of the challenges that, that drug channel is having and then trying to meet their financial commitments and things like that.

But I think we're very focused on winning with the winners. Also while ensuring we have a lot of consumers and our consumers that go through that drug retailer. So, we want to make sure we're right on that business. But no, I don't have a concern that we're moving to channels where maybe we're less -- have less strength.

And then actually, if you look at Amazon specifically, our top 18 brands are over 90% of the business in the Amazon, 18 brands are over 90% of the business. 16 of those brands actually have higher share on Amazon than they do bricks and mortars. So for instance, Sensodyne, which is roughly a 21% share or so in bricks and mortar is close to a 28% share on Amazon. So even when that channel shift happens, there is some benefit to us as you're moving from a channel with higher share.

And maybe final question on the U.S. But in terms of competitiveness, when you look -- obviously, a lot of stuff going on with the channel or the consumer, but where are we in terms of U.S. market share competitiveness? Are there spots where you're still not happy from a share point of view. I mean, Advil is an obvious one where it's been a share issue. Where are we on that? And are there any other spaces within the U.S. where you'd like to improve the share?

Yes. So if you take, again, a big step back and overall share, we're growing share in the U.S. And again, 0.5 point up in the market, 0.5 point down from a consumption per basis, means we're growing ahead of the market, we're growing share. Within that, clear strength in oral health continues, and we expect it to continue.

And then across any portfolio, you have areas that are doing better and not doing better. Advil grew share full year 2024 in the first half, though, it was under share pressure again. We've now in the latest period, we've stabilized that. We think we have strong plans in the back half.

So again, I think across any business in any portfolio at any given time, you'll have things that are doing better, not better. We're very focused on the overall consumption.

Am I happy? I'm never happy. So I mean, yes, we should be -- I want to see us grow more share. I want to see us grow a bigger percentage of the business growing share. I want to see us drive more volume. I mean, it's very much a focus of the business of how do we maximize the portfolio. But it's not that we're losing across the board, and we have major significant issues on share.

And maybe just turning to one of the key categories of VMS. I mean, the question we're getting from investors is the category structurally challenged, especially in developed markets. Obviously, it's a different story in emerging markets, but in developed markets. And Centrum has been doing well. You've been putting science in it, with Centrum Silver, et cetera. You've got new stuff coming in Q3. But some of your competitors like Nestle are now looking to sell big chunks of VMS, Church & Dwight.

And so there's a bit of a question mark about, actually does the consumer really believe in this science? And why are other players actually exiting where you're doubling down? It's obviously been challenged in the first quarter. It was a bit better in the second quarter, but still negative in the U.S. How do you think about it kind of structurally? And should we expect to see VMS in the back half in the U.S. to turn positive?

So I think, if you take a step back and just if you look at our portfolio, three brands make up about 85% or so. So that's Centrum, obviously, in 68 countries. Emergency, immunity, very focused on the U.S. Caltrate, which is in a number of countries, the biggest country being China, and we feel like China is a very strong place as osteoporosis is a major focus for the Chinese government, we partner with them, and we think we drive really good business there.

Now -- and again, just to isolate it back to the U.S., if you look at our business outside the U.S., it grew mid-single digits. It was the U.S. that was the challenge. The challenge specifically in the U.S. that we saw in the first half is a year ago, consumption on Centrum was up in the high teens. And that was driven by the activation of the cognitive function claim that you mentioned. Now, it's down. We're not -- we're giving some of that back. We're not giving it all back.

So I think for us, it's more of getting the rhythm right on the claims and what we do. I do believe -- and we have a new claim, as you mentioned, we're activating now in the back half around that cognitive function. We have a number of things going on to come out with new science-backed claims. We do believe that, that is a massive opportunity done in the right way with the right credibility and the cognition claims, some of them were done in partnership with Harvard Medical School. So it's like this is real credible stuff in a category where, frankly, there isn't as much credible stuff, and we believe the consumers that really resonates with consumers.

We also think Centrum is a brand with a history and legacy that can really carry that. So, we believe there's an opportunity here as a consumer health company where we can do something unique and different, given our medical, regulatory and clinical capabilities that maybe some other companies that aren't in the consumer health space would necessarily have. So I'm still optimistic about it. There's no question we faced some headwinds in the last 6 months.

Have VMS maybe in emerging markets by the contrast growing?

Yes. So again, in emerging markets, it's growing really well. It's also part of our focus on low-income consumer. We believe this is an opportunity. Again, we believe those things are going to be slower burns. So we launched in India, Centrum 1.5 years ago or so. A couple of years ago, we launched in Centrum Essentials in Brazil, where we specifically designed products for that low-income consumer. That kind of stuff takes a little bit of time, but we think can really build momentum.

I look at launching Sensodyne in India 11 years ago, and now it's our second largest market continuing to grow in the mid-teens. But in those first 3 or 4 years, it was a relatively small business. So I believe some of this is long-term investment and category creation.

If you look at China, it's a well-established category, and we have very strong positions with both Centrum and Caltrate.

Can we spend a bit of time on the Oral Care business? Obviously, great portfolio for you. You mentioned a multiyear runway for Sensodyne and you've got a clinical platform, the Clinical Whitening platform, Clinical Repair, Pronamel as well. Are there any new areas that can be -- that are untapped? Or is it more about extending existing brands and then closing the incidents versus the treatment cap? And what innovations should investors be most excited about? Is it more just about rolling into more countries, maybe kind of size it for us?

Yes. So if you look at the performance of Oral Health first and then Sensodyne over the last number of years, it continues to be really strong. We continue to grow share in the U.S. and outside the U.S. and on a global basis. The clinical platform, we started with Clinical White and then we launched Clinical Repair. And now in the U.S., we launched Clinical Enamel.

It's doing really, really well. And it's really doubling down on what I would say, makes Sensodyne in kind of special, which is this therapeutic focus, the dental recommendation. And what we've seen on all three of those innovations that it really does get that dental recommendation in a big way, because the data is real and it's there.

And I've told this story a few times, but 6 months after Clinical White launch last year, I went to Chicago for business meetings, I spent a day with our dental detailing team. And to a dentist, they would say, we don't recommend whitening products, because they're not good for gums and sensitive teeth. It took them through the clinical data on Clinical White and they said, we'd recommend that. And that's the thing.

So Clinical White is now in 16 markets. It'll be in 21 markets by the end of the year. Clinical Repairs in 16 markets, they'll be in 21 markets by the end of the year. Clinical Enamel has launched in the U.S., and we'll start rolling that out, although Enamel isn't as big in many other markets. And we're very clear. There are some markets where Clinical White may not launch for 3 years, because the whitening segment isn't quite as established.

And then beyond that, we have additional Clinical Innovation that will come out. We haven't launched yet. We also -- again, the low-income consumer opportunity with INR 20 pack in India, we launched that. We've gone from 0.5 million outlets in India to 1 million. We'll go to 2 million to 3 million.

We're also launching cavity plus sensitivity in emerging markets for low-income consumers, because for that consumer and for that mother who's buying, she's buying for the family and cavity is still very important. So we'll also launch slightly bigger sizes. So we're continuing to learn and kind of evolve. But we think in the longer term and midterm, that's going to be a real growth driver for us.

And maybe while we're at it, can you talk about Parodontax? I mean, feature in the CMD. How many countries is Parodontax in today? I think China was a big new market, big launch -- in building gum. So any idea of how big the brand is, how many countries that you've got a long runway to go.

Yes. Yes. Listen, it's in about 60 countries, but I think the challenge for Parodontax historically has been the resource allocation to be able to support it. And I'm talking pre-kind of Haleon, right? When we were still a division of a pharma company, we didn't have the P&L capacity necessarily to go fully activate that. We do now, and we are. So that's why launches in China, in India, in South Africa and a number of markets we've kind of leaned in on. It is growing in the mid-teens. I don't think we've disclosed how big it is. It's not nearly as big as Sensodyne as you can imagine.

Gum health is quite a big category. And actually, in China, it's multiples bigger than the sensitivity market. So early days again, and it's -- it's an investment we will make for the medium term and long term, but we are quite optimistic about the launch in China and what's happening. And we believe this mid-teens growth of Parodontax can continue on for the foreseeable future.

But you mentioned China, so maybe that's a good segue to talk about China. You've completed the buyout of your JV partner. Can you tell us now post that buyout what, what the opportunity is, what the growth was in the first half, the outlook? I guess you can reach more pharmacies. Why is it such a big unlock for you? And what is the size of the price in China?

Yes. So listen, to step back, if you think about our business broadly, 20% oral health, we've owned that 100% all along. 40% VMS. That's been our business, 100% ownership. The joint venture has been on the OTC business. And it was a 55%, 45% joint venture. So first thing is, by doing the deal, it brings in 100% of the profit. And we're not paying a JV partner. That was 2% EPS accretive. So financially, this absolutely made sense.

From an operating perspective, we were running the business ourselves, but there was a JV board. And it kept us from doing things that just made sense for the business. One of them you mentioned, which is our go-to-market model, we would have -- TSKF was the name of the JV. There was a TSKF sales force and a Haleon sales force. Calling on pharmacy, sometimes one after another, because of the structure of the JV, there wasn't really any opportunity to collaborate or work together. We're combining those sales forces now.

It does two things. One is, there's just cost synergies, although it's less about that for me in China. But there is serious cost synergies because we don't need 1,000 of these and 1,000 of those call in the pharmacy.

And then from a go-to-market perspective, now we're showing up the pharmacies with the broad portfolio and the scale and it does allow us to reach more markets. So I think it's a really -- it was financially a really smart thing to do. Operationally, I think it frees us up to really invest and unlock the full potential of that business. And now the returns on the business are much greater, because we're getting 100% of the returns.

And then, maybe moving to India. I mean, obviously growing very quickly already. Do you think India can accelerate the growth from here into the back half? And you've got quite a small portfolio in India, although you said Sensodyne, it's the #3 market already. Is there any reason why you can't surf in more of your portfolio more quickly into India to broaden your footprint, maybe expand distribution?

I know that was a focus at the CMD. Maybe you can give us an idea of where the distribution points are today in India, how much you can increase those by? Presumably, at the end of the day, it comes down to price point as well. If you get the wrong price point, it's not going to work. How do you balance the price point versus the margin as you're trying to scale a business in India?

Yes. And listen, first of all, we look at our portfolio and business, Sensodyne. And like you -- like I mentioned earlier, #2 market globally behind only the U.S. growing in the mid-teens. By the way, up until a year ago in 0.5 million outlets, India has millions and millions. The other just on the portfolio, we've launched Parodontax, although not in a big way as China, because gum health isn't as established. So again, we think is a longer-term play.

We do have IODEX, which is a topical product that we've launched Voltaren brand under. It didn't makes sense to launch Voltaren. We've launched it under that. ENO Digestive Health brand is also a very big brand in India. And then we've launched Centrum recently.

I feel like we have enough going on in India now to establish the launches that we have and stuff, but there's an opportunity over time for us to continue to expand the portfolio.

From a distribution perspective, again, Sensodyne has 0.5 million outlets, we'll get it up to 3 million outlets. And on the low income consumer and price point and stuff, if you think about the gross margin on that, if you design it right, it doesn't need to be significantly gross margin dilutive.

Actually, our ENO brand in India, which sells a majority of the volume goes through a INR 10 price point has very healthy gross margin on it. So we think there's opportunities to continue to expand, continue going after the low-end consumer on ENO, which is already established, on Sensodyne, on Centrum, and I am optimistic that the back half will accelerate growth.

Okay. I'm going to turn to savings. At the CMD, you outlined GBP 800 million of savings out to 2030, and you guided to 50 to 80 bps of gross margin per annum, and high single-digit adjusted EBIT growth at constant currency.

If I do my math on that, if I take the midpoint, 65 bps for 4, 5 years, you get to a gross margin of basically 66, 67 by 2030, so a big increase. Does that drop through or does it get reinvested back? Because you're already spending 19% of sales on advertising. Does the advertising number need to go higher to improve your volumes more consistently in the U.S. and Europe?

And if push comes to shove, would you sacrifice your gross margin target to do less than that if you needed to deliver more volume growth to hit the kind of healthy volume balance within the 4% to 6%? So it's one about the savings or drop through and then how you think about it philosophically in terms of what's more important.

So -- Yes. So the GBP 800 million savings and 50 to 80 basis points of gross margin, we're quite confident in that just to be clear. And if you saw the first half of the year, we grew gross margin 160 basis points. So I think what you find, by the way, when you do the supply chain things is you try to quantify all the work you're going to do and what's it going to deliver, and we did that. And my feeling was, there's more there, once you get into it and you realize that.

So I feel very confident in the savings. What it allows us to do, by the way, is provide the high single-digit operating profit growth and still invest in the business. So if you look at the first half, we invested in A&P, 6.8% growth and R&D plus 9%. I want to invest in A&P and R&D to unlock and drive growth. We're not underfunded in A&P to be clear.

But as we go after some of these new areas, low-income consumer, which requires education, launches of Paradigm tax in China that's going to require more investment, and we want to invest to drive growth.

Your question on gross margin versus sales growth, I actually think from a gross margin perspective, it's almost a bit independent, because it's supply chain savings and things in our control. It's not like if I said, I'll do a little less gross margin to drive more growth.

Now I could transfer your question to operating margin. That's a different choice that anyone can make. The high single-digit growth, we believe, given our confidence in the productivity will still allow us to invest in A&P and R&D in a healthy way. It also gives us a ton of flexibility that if we don't believe the ROI is there, we don't believe that the investments make sense, we can bring more to the bottom line. So we feel like that algorithm of the 50 to 80 basis points, 4% to 6% growth with operating leverage in any business get you the high single digit with still a lot of flexibility to make the investment choices.

Maybe you can talk a little bit more about the savings. When Namrata Patel gave the presentation, it was quite significant in terms of the buckets. People forget that Haleon is a 3-year old company, there's actually a lot of opportunity. If you had to sort of rank the top 3 cost opportunities, what would you say on that?

Well, I'd almost put it in three tranches. And again, this background, if you think about Novartis Consumer Health, GSK Consumer Health, Pfizer Consumer Health, three supply chains that historically, by the way, those supply chains were run by the pharma divisions of the company. By the way, three great companies, very good at what they do, but supply chain for pharma companies where you have 90% gross margin in some cases and low volume isn't the place where you get value.

So as we take a step back -- and because we were a company that brought a portfolio together from three different companies, and we focused on delivering GBP 1 billion of synergies across the two big deals, we did the integration. There's a bit of low-hanging fruit tranche, which is clean up the portfolio, some of it is just blocking and tackling multi-language packaging, the number of different 12-ounce sized bottles we have, which drive changeovers in the plant.

So over the next couple of years and what you're seeing now is a bit of the benefit of that. So we're seeing more efficiency in the plant, better leveraging the plant, allowing us to bring things in from third parties into the plant. So I'd say there's the portfolio simplification make operations better. There is the CMO kind of in-house things as we get more capacity in our plant.

The second is just around capital allocation to automation in the plant. And we're beginning that now, but that will also take a little bit -- it will be a bit longer term that it will continue to deliver dividends over the next number of years.

And then the third is the opportunity to build additional plants in areas that really make sense where we see the opportunity. All that is kind of the three-step approach, and we've talked to India and China. I think we said that at Capital Markets Day. So that's why we see this kind of 5-year run rate of the low-hanging fruit, not necessarily easy to do, but not rocket science, right? Just blocking and tackling.

And maybe a final question for you, Brian. On the algo, how confident are you of getting back to the 4% to 6% algo in 2026. And what would you assume North America does within that? And then, what would need to happen to get into the top of the range? And what would need to happen if it was at the bottom of the range? What's the -- is it the U.S.? It's primarily the delta -- just in terms of your confidence into next year, what's North America assumption?

Yes, yes. So listen, we're in the process of finalizing all next year's plans. We have quite a robust strategic planning process and looking at the next 3 years, and we've done that. And I really am confident in the guidance I gave at Capital Markets Day over the medium term, which is the 4% to 6% and the continued profit guidance and the strong cash flow and everything else that comes with that.

I think, as I look at next year, I do expect to see the U.S. come back to growth, not necessarily, let's say, not counting on some amazing turnaround or anything, but we -- I see the opportunities for us to get that business back to a place and end the year in really a healthy inventory level. So I remain confident.

Listen, the stuff we laid out at the Capital Markets Day still really holds a treatment versus incident gap. The innovation-led premiumization, which is oral health continues to go from strength to strength the low-income consumer in the emerging markets. And if you do look at this year, the challenge really has been the U.S. and it's a bit of market dynamic. And it's a bit of, honestly, I think we can and should do better. And I think with our new leadership in the U.S., I'm quite optimistic that we'll get that right.

Good.

I have a few questions for you. The reverse fireside as I like to call it. Okay. So listen, we're a relatively young company, only 3 years old. As you look at our business, do you think there's areas you talked to a lot of investors that are less understood in the business areas that we need to educate our investor base on more to understand our business?

I think one area that maybe goes under the radar is the cash flow. I mean, from CMD, you're talking about a 30% reduction in like cash working capital. And clearly, if you can really take down that cash or improve the cash conversion and reduce the inventory days, I think the impact on the balance sheet deleveraging hasn't been fully recognized by the market. And it'd be lovely to get a little bit more detail on the drivers and the timing of that. There's so much focus on the top line and the margin savings, people forgot that actually cash flow was another big element of the CMD. I think that's one.

I think two, we'd love to hear from Natalie in the U.S. when she's done the diagnosis of the business to hear from Natalie about what the issues are, how you can improve things, where you are specifically around things like e-com and marketing given her background at L'Oreal. We would love to do that. So maybe a little bit of an ask for mini CMD on the U.S. when you can.

And then maybe thirdly, you're going from five categories or six categories, and you're breaking out for the first time, therapeutic skin health as a category, as a sixth category. It'd be great to understand what your vision is in terms of growth, and you've obviously done it for a reason. We'd love to know what the playbook is and how you think about it?

I ask you a question and I end up with three questions. Well done. Well done.

Maybe just two things before I get to my second question is, listen, on cash flow, I think it's a really good point. Extremely strong cash business. And as we look at investing more capital in our supply chain, we can fund that completely by the inventory reduction and working capital reduction. And part of that, by the way, links to the productivity program and the efficiency of our plants. Simpler the portfolio, the better our plants operate, the more room we have to reduce inventory perspective.

And I do agree on the U.S. that we've had some discussions about how do we give more visibility to the U.S. as we get clear on that point.

So -- so yes, so thank you for that. And maybe my last question, listen, we obviously here talked a lot about the U.S. I would imagine that everyone is talking a lot about the U.S. As you look across consumer staples more broadly, what's your takeaway on the U.S. environment, U.S. consumer? And do you see differences within Consumer Health versus other consumer staple categories you cover?

I think a couple of years ago, Consumer Health has seen us being quite a modern category. And I think what we're seeing now is that some segments are becoming winners and some that are becoming relative losers and I think that investors are starting to make that distinguish between the winners and losers. I also think there's a bit of a point around the U.S. Consumer Health versus Rest of World Consumer Health.

And ultimately, I'm getting more questions about in Consumer Health in the U.S. Is there a pricing issue? Has the price been taken a bit too high in some of the more commoditized categories. But ultimately, what everybody wants to know is when is the U.S. sell-out kind of improve and when what's destocking. I think there's a question mark about this destock. I mean, as long as I've been doing this job, we've been talking about destocking. It's not a new phenomenon. It just seems like it's getting a bit weaker.

And so, I think people are trying to sort of understand how much of that is actually just cyclical versus is there a lot of structural elements. So yes, it's quite a complex environment in the U.S., and everybody is just trying to get a head around it.

Yes. But on that note, Brian, I'm going to -- we're going to cut it there. And we're going to have a breakout next door. So we're going to have 15 minutes. If you want to join us next door for more questions for Brian, please do join us. Thanks, Brian.

Thank you. Yes. Thanks, Warren.

Good morning, everyone, and welcome to Haleon's Half Year 2025 Results Q&A Conference Call. I'm Jo Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer.

Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed in or implied by such forward-looking statements.

We have posted today's presentation on the website this morning, along with a video running through the results in detail. So hopefully, you've all had the chance to see that ahead of this call.

And with that, let's open the call for Q&A, and I'll hand back to the operator.

[Operator Instructions] Our first question comes from Guillaume Delmas from UBS.

So two questions for me, please. The first one on North America because in Q2, both EMEA, LatAm and APAC were well within your medium-term 4% to 6% organic sales growth guidance but North America was a clear outlier with a, I think, nearly 2% organic sales growth decline. So could you maybe help us unpack this performance in North America in Q2?

And in particular, do you think it was primarily down to temporarily lower category growth? Is it down to significant discrepancy between sell-in and sell-out? Or are you also seeing some share erosion? And I guess last question on this. Would you expect North America to return to growth and ultimately back to the 4% to 6% range over the coming quarters or it may take a bit longer as the challenges persist?

And then my second question is on A&P, increased significantly in the first half. I think it was up 130 basis points. A question here is in which areas are you disproportionately reinvesting? Do you feel you get some great returns on this incremental spend? And I guess, looking ahead, what should we expect for A&P spend as in was the first half a bit of a one-off? Or should we expect another marked step-up in H2 and beyond?

Thanks, Guillaume. Appreciate the questions. Let me take the first one on North America, and I'll pass it to Dawn for the second question. And maybe just as I get into North America, we do feel good about EMEA, LatAm and APAC and also feel good about the back half in both those areas. Also feel great about the organic profit growth driven by the gross margin, 160 basis points, and the strong cash flow.

But there's no doubt that North America has been a challenge. And maybe if you step back, I think there's two market dynamics and then let me touch on our own performance. I mean, first, there's no doubt that there's a challenging consumer environment, and consumer confidence is at a low, and I think our categories are more resilient than most in that context.

But we are impacted in certain categories and smoking cessation is definitely one of them. I talked about it in the past. This is $30 to $40 price point range. So we are seeing trade down in that category. Outside of that, we're not seeing a trade down overall in the business. And that has been a drag on growth.

I think the second thing is we continue to see the shift to Dollar and Club, which are more value channels, which is what we're seeing in this consumer environment, and e-comm. Now I'd say in all cases, we have strong presence in those channels.

And I've talked about e-comm, where 16 of our top 18 brands they actually have better shares online than offline. So that's very manageable. But we are continuing to see these inventory pressures, drug retailers, but I think everybody, all retailers in the U.S. are dealing with that kind of environment.

Now as far as our performance. Our consumption is growing ahead of the market. Now to be clear, the market is slightly down, about 0.5%, and our consumption is slightly up, about 0.5%. So we're growing ahead of the market, but not significantly to be clear.

Now we're seeing strong growth and market share gains in Oral Health and market share gains across Digestive Health, brands like Tums and Benefiber are doing extremely well. But overall, we're not satisfied with the performance. And we have a bit mixed performance in Pain Relief and VMS. So let me unpick that a bit.

So in pain, in the first half, we have slightly lost share on Advil. Now we've taken action, we have new plans in place. We have a new media campaign that's on air live now, and we see early signs. I mean in the back half of Q2, we were getting -- we were back to share growth on Advil.

Now on VMS, we have two brands, Emergen-C and Centrum. On Emergen-C, we continue to see really strong consumption and share gains. Now sales were up low single digits. Emergen-C was one of the brands that at the end of last year when we saw that very low cold and flu incidences in December, we started the year with a bit of higher inventories. But overall, the brand is very healthy.

Centrum has been a challenge. Now overall on Centrum, really good growth, mid-single-digit growth outside the U.S., high single-digit growth in Q2 outside the U.S., but we saw declines in the U.S. Now a year ago is when we first activated our cognitive claims on Centrum Silver, and we grew high teens consumption, about 4x the market. So we're indexing across a high base. But listen, that said, even with a high base, our expectation is we continue to grow share. So we firmed up our plans.

We have -- we are -- reactivating the Centrum Silver with a new claim, slows cognitive aging by 60% with some innovations in the U.S. on Centrum in the back half, and we have a new partnership with U.S. women's soccer that we're beginning to activate that we're optimistic about. So in the back half, I definitely expect to see improved share positions on Centrum and Advil, but we do believe the inventory reduction will continue to happen.

As we look at inventories across retailers, I think they've been much more proactively managing their inventory levels as they're seeing issues with them delivering on their numbers in the whole environment. We want to more proactively manage that with them going forward.

Really, really important that we do what we need to this year to make sure that we're at the right levels as we exit the year into next year. So in our around 3.5% guidance, we are not looking for a significant improvement in the U.S. environment at all, and we're expecting to continue to see inventory pressure.

I will say though, looking forward to the medium term, we have a fantastic business in the U.S. Really, really pleased with Oral Health in the U.S. where we gained 0.5 share point in the first half and continue to go from strength to strength and we're confident in 2025, 2026 and beyond as we strengthen the business in the back half.

Why don't I pass it to Dawn to talk about A&P?

Yes. Thanks, Guillaume. So I think the first thing to say is, as we laid out at our Capital Markets Day, we have significant opportunity in supply chain productivity. And you saw that come through in the half and the benefit that's come through in gross margin has enabled us to continue to invest in A&P and R&D, and that provides the flexibility and agility that we talked about across the P&L.

So in terms of, if I focus then on A&P. So A&P is up 6.8% in the half to 20.8%, and we are leveraging A&P to focus on the three growth drivers that we've outlined, closing the incidence treatment gap, driving premiumization with our innovation and expanding reach to lower-income consumers. And if I think about from an innovation perspective, we've been rolling out very successful innovation, particularly around our clinical range, Nasal Mist on Otrivin and Panadol Dual Action.

So the first area that we've been focusing on in terms of spend is around supporting the innovation. If I think from a geographic perspective, we've been focusing on driving growth in key markets, so particular markets like India, where we saw just under double-digit growth, in EMEA, in Central Europe and also in China. And obviously, experts and our recommendation by expert for our brands is a critical part, and that's the other area of our investment.

But it's not just about increasing the investment. It's also about the effectiveness of that investment. And in the half, we've improved ROI by 4%, and we continue to look at the balance of working, nonworking and I think there's more opportunity for us to go on that. So I wouldn't say this is about phasing. If I look to the second half, I would expect us to continue with similar shape, and I would expect us to continue to invest across those areas that I talked about in terms of our A&P.

Our next question comes from Rashad Kawan from Morgan Stanley.

A couple for me, please. On -- first one on North America, again, and the 3.5% growth for this year. You said you're not expecting a significant improvement in the U.S. in the second half. I think the expectation, obviously, was that you'll see quite a meaningful step-up in Q3, in particular, given the late end to the cold and flu season last year and retailers starting from a low base.

I guess, what's changed around expectations there? Is it just the destocking trends maybe cautiousness from retailers continued more so than you expected, Smokers' Health being weaker? Just trying to unpack kind of the key changes from when you spoke to us in Q1 versus where we are today.

And then just second question on the business -- the percent of business gaining or maintaining share decelerating from the 71%, I think, in 2024 to 58%. Can you just kind of talk about what the key drivers of those are? And I think you've said in the past kind of think of where we want to be as somewhere in the 60% range. Is that the right way to think about it longer term?

Thank you, Rashad. I'll take both of those. I think first of all, on North America and we look at Q3, I mean a couple of dynamics are happening. You remember last year, we did reduce our PE products in cold and flu in Q2, and we repiped in Q3. Now this year, it didn't show up in the numbers because we had a low allergy season. We haven't talked about that yet, but that has an impact on us that Flonase is a pretty significant brand in the U.S. environment. So Q3 needs to deal with that base on the sell-in.

And the reality is the environment is uncertain. The environment is difficult in the U.S. and the retailer environment and the stock and trade. And to be clear, I don't think our stock and trade levels are too high from historical or versus peers, but it's really the retailers tightly managing that as they're struggling with things like foot traffic and sales growth and things in that difficult environment.

And then the second question? Gain to maintain share, I apologize. Yes. No. Thank you, Rashad. Last year, we had a very strong result at 71%. And I think I said it was a fantastic result. I think I said at the time, while, listen, my objective and ambition is always to maximize that number, to be clear, I felt like that was a high number that would be difficult to sustain, and you are correct, I've always said that where I feel like we want to be is at 60% plus, and we are slightly below that in the first half.

If you look at the two of the -- two big drivers of that going from 71% to 58%, it's the two that I talked about, both in the U.S. Advil grew share for full year last year in 2024. And this year, in these numbers, it's not growing share. Again, we've seen green shoots, and we're growing in the back half of Q2, but this is a year-to-date number.

And Centrum. Centrum is not growing share in the first half. And actually, we've seen consumption decline against that high base. Again, we are working on plans to kind of stabilize that in the back half. But those are two big things. With those two growing share, obviously, we would be well in the 60% range. But again, we want to maximize that number. I think 58% is a good number, but it is a bit below what I'd like to see on a consistent basis.

Our next question comes from Callum Elliott from Bernstein.

Perfect. And I wanted to just start with the U.S. again, hoping that we can talk about the retailer environment, which you call out again in the presentation. I guess my question is twofold. Firstly, maybe can you give me a sense or give us a sense of the channel split for your U.S. business and specifically how big the drug channel is as a percentage of revenues, which I guess is the problem that you're calling out?

And then more broadly, the drag that you talk about, I'd love your thoughts, Brian, on whether there's anything that Haleon as a company can actively do to offset this? Or do you just have to accept that it's an externality, so to speak?

And then my second question is on some of the strategy from the CMD. So you had obviously set out some very ambitious strategic plans just a few months ago.

My question here is with the core business clearly struggling a little bit and sort of the negative revisions to the full year guidance that we've seen today, does that deemphasize or would deprioritize some of these -- some of the strategic push that you had spoken about at CMD in terms of democratizing, expanding access to lower-income consumers, lower price points whilst you fix the core business, so to speak? Or do you think of these as two completely separate things, Brian?

Thanks, Callum. Appreciate the question. Let me start first on the U.S. retailer environment. Listen, we're like most companies that Walmart is our #1 customer in the U.S. and roughly 1/4 of the business. We tend to be a little more skewed towards the drug channel, given our portfolio, the combination of the drug channel is less than what Walmart would be in the business and then it cascades down from there for all the big companies.

Listen, in the end, what we own and control and need to actively do is perform and deliver market -- deliver share in the U.S. and also drive market growth. Listen, we are category leaders. So part of our role is -- while the market is struggling a bit, part of our role is to grow those markets. And we've done that in the past. We need to continue to do it.

Obviously, the one place we continue to do it is in Oral Health. I mean we are driving category growth in Oral Health and that is our focus. So we need to deal with the current environment, but we're very focused on our performance and our share growth.

Listen, as far as CMD ambitions, absolutely nothing changes. I feel really confident about the medium term. We are clearly dealing some headwinds on the business and in the U.S. is a challenging environment, and we're not immune to that right now.

But as Dawn mentioned, as we look at our investment, part of our investment is that low-income consumer packs we're doing in India, the INR 20 Sensodyne pack and we'll be launching more SKUs on Sensodyne as we look at the balance of the year and into next year, Centrum Recharge in India, ENO, our INR 10 pack in India, our launch in Brazil that we talked about at Capital Markets Day, Sonridor, which is our foray into systemic pain relief there with low income offering. So that continues to be there.

The innovation-led premiumization has always been core to our strategy, and we're going to continue doing it. And then core penetration is all about closing this incident gap. So listen, we're staying very committed to what we said at Capital Markets Day on the growth side. Feel medium term, we will be where we need to be.

Productivity, which is the other thing I laid out at Capital Markets Day, I feel really, really good about our progress, to be honest with you. We had talked at Capital Markets Day the reduction of SKUs that we did in 2024 that we weren't starting from 0. We are seeing that pay dividends in the gross margin, 160 basis points in the first half, feel great about that.

That enables us to deal with these growth headwinds, invest to make sure we're competitive going forward and deliver the operating leverage on the business. As Dawn said, it gives us an awful lot of flexibility on how we can manage the P&L while we're facing a bit of growth headwinds in the U.S.

Our next question is from Celine Pannuti from JPMorgan.

My first question is trying to a bit zoom out of the discussion on the short term. And if I look at your volume performance 0.8% this year, it was 1.3% last year. It was 1% the year before. I presume for this year we'll land around 1%. So 3 years of 1% volume mix. What gives you confidence that you can deliver 4% to 6% in the midterm?

I think we will need a step-up in volume, and we are not seeing that. I mean yes, if you could explain what you think has not worked and why you seem confident that you can still do 4% to 6% in the midterm?

And then my second question may be somehow related. We've seen -- you said you feel strong about Latin America. Europe, we've seen some other companies talking about weakness there. Yes, I would like to hear a bit your outlook in that region.

Thank you. Listen, I'll answer the first question, I'll pass it to Dawn on the question about EMEA, LatAm. So listen, if you look -- unpick our results a little bit, if you look at EMEA, LatAm, volume growth accelerated from 0.5 point in Q1 to 1.6% in Q2. In Asia Pac, volume mix accelerated from 3.3% to 3.9%.

So if you -- and -- but we were at 0.8%, you are correct, in the half. And that's completely linked to the dynamics and the challenges we're seeing in the U.S. U.S. volume was down 1.8% in Q2. So -- and 0.6% in the half. So no question that we see the challenges, and we're on it in the U.S. environment.

I talked about some of the actions we're taking to firm up the business in the back half. We do have new leadership in the U.S. as of May 1. I feel great about our leader there, and I'm confident that we'll do what we need to in the back half and really be set up to return to growth in 2026, and I'm absolutely continue to be confident in our medium-term guidance. Dawn?

Yes. Let me just -- I'll just build on that and then come to the Europe piece. So I think, as Brian said, if you look across the other regions, our volume has improved in Q2 versus Q1.

If you look at Asia Pac, 2/3 of our growth in Q2 came from volume. And actually, we continue to see that accelerate. And I would expect second half the growth in Asia Pac to be more weighted to volume. If I look over the last 3 years in Asia Pac, our growth is actually 4.6%. So actually, it's very strong, it's consistent.

If you look at EMEA, LatAm, again, improving trajectory in Q2 versus Q1. If I look to the balance of the year, we'd expect a more balanced price volume mix growth. And actually, if you look over the last 3 years, we've been seeing that trend in that region in terms of volume growth.

To Brian's point, we've talked about the situation in the U.S. in terms of consumer environment, retailer environment and a couple of our brands, and so actually, when I look at the volume piece, it is to do with the U.S. and actually, we're seeing the shape we would expect to see across the other regions. And as I said, I would expect to see that shape in second half.

If I then talk about Europe, in particular, actually, we're seeing Europe is pretty resilient. Actually, we're seeing a good performance, we're seeing high single-digit growth in Central Europe, mid-single-digit growth in what you might call kind of Continental or Western Europe.

So for us, that's holding up pretty well. Why is it holding up so well? We see real strength in Oral Health. actually, is a core driver of that. And we talked about some of the innovations, the successful innovations across the regions.

Can I just follow up and maybe on the previous question, I think that Callum asked? I mean you have a high single-digit organic -- sorry, reported EBIT growth as a target going forward. Again, if you think about the -- my question about volume mid-term, I mean, does that kind of like -- if the growth is less important, would you want to reshuffle some of your potential profit growth back into the business, i.e., grow less, but try to stimulate volume?

Well, thanks for the follow-up, Celine. Listen, we guided to high single-digit growth -- operating profit growth at constant currency driven by the gross margin opportunity we have.

So you can see this year, while again, we're a bit more challenged than we've been in the past on growth and specifically in the U.S., the gross margin improvement and with the leverage in the P&L has allowed us to invest in A&P and R&D in a healthy way, and still drop the organic operating profit to the bottom line.

Obviously, we still have a drag of a couple of divestments that we will anniversary once we get through Q3. So no, again, I feel very confident about the algorithm we set out at Capital Markets Day and the fundamental tenet of the opportunity we have in productivity, which is coming through.

Our next question is from Warren Ackerman from Barclays.

Warren here at Barclays. I'm sorry some of these have been asked. I had a few technicals. So the first one, Brian, on Advil, you talked about some green shoots on that brand. What are you doing to fix it? I think it's been losing share for a long time. I'd be interested to get any perspective on that specific brand.

And then secondly, on Smokers' Health, are you able to tell us how big it is in the U.S. and what your expectations are for Smokers' Health in the second half of the year? I mean, do you need to take pricing down to make it more competitive versus private label or something else?

And then thirdly, on Centrum, thanks for your comments on Q2. Is there anything happening on Centrum on innovation in the back half where we should feel a bit brighter in terms of the outlook for Centrum in the U.S.?

Yes. So a couple of things. I think first on Advil, it has been a bit of an up and down story, to be honest with you. We did exit last year for the full year growing share on Advil. It was one of the things that contributed to 71% and that was a bit of strength as we exited the year, and it gave us -- brought us into share growth for the full year, but it's been a bit up and down without question.

The green shoots that we're seeing are, listen, we've had new media campaign, there were strong promotional plans in the back half. We feel like we feel good about Advil and where we will be. Listen, there's no question, this has been a battle with Kenvue on Tylenol, which I said in the past, it is one thing that was working well for them, and they doubled down. But we feel good about our brand, and we feel good about the plans we have in the back half.

Smokers' Health for us is a couple of hundred million kind of business for us, in that kind of range. Listen, we're looking at it. We expect that in the back half, as we look at our plans, that we'll see less decline in the back half on Smokers' Health, but we're not at a point where we think we'll get that back to growth and because we don't expect much change in the U.S. consumer environment, if that changes, then something would be different.

We also do have an innovation on Smokers' health, a dual-layer tablet that we have FDA approval on. It will launch in e-commerce in the back half and then do a full launch in 2026. So that gives us some reason to believe that we'll have something that's differentiated in the market that can help us there. And then what was the third question?

Centrum.

Oh, Centrum, apologize. Listen, on Centrum, a couple of things. I mentioned the new claim. Again, one of the things that drove Centrum tremendously in the U.S. last year was the Centrum Silver claim we had on cognition. We're reactivating with a new claim. I think I mentioned it, it's slightly different, but it's meaningful and the new claim being slows cognitive aging by 60%. Aging, obviously, also is a very big topic for consumers in that cohort. So we have that.

We do have a couple of innovations that are going out. I won't talk specific of them because I don't think they've been announced to the market, but a couple of things that we think will also help firm up. And listen, it's a big focus for us. Like I said, Centrum is a great brand. It's doing quite well outside the U.S., but clearly facing headwinds in the U.S. on a base of tremendous performance a year ago. But again, we want to grow despite what the base is, to be clear. So that's a big focus for us going forward.

Our next question comes from David Hayes from Jefferies.

So a couple from us, one nicotine replacement, and one on the margin. So nicotine replacement, just to come back to this, we may have missed this, but could you just quantify the drag that it had on the second quarter? And also, can you quantify what impact it has in that new guidance of 3.5% or around 3.5% growth for the full year?

And staying with that topic, you just talked about new innovation, but it always feels like this is a little bit of a periphery category for you. I think it's a partnership with Kenvue and even Sanofi as well. So is it fair to say it's less of a focus for investment? How do you account for it given you've got these partnerships? Is it fully consolidated with the minority?

And then given the partnership structure, is that why you've kept this business in the U.S. whereas obviously, you've exited in Europe? Is this something you're kind of stuck with? Or could we just see it as it could go at some point?

And then the margin question was just on putting it all together, high single digit on organic, the FX and the M&A dynamics. Is the guide effectively for flattish margin year-on-year on a headline reported basis? Is that the right kind of conclusion?

Thanks for the questions, David. So listen, I'll pass the growth question, margin question on to Dawn, but let me start with the nicotine business and the structure. It is a bit of a three-way venture in the U.S. There's a -- part of it is with Opella, and Opella has -- it's a joint venture with Opella, and then Kenvue is a supplier of Nicorette.

As you know, Nicorette is a brand that Kenvue owns outside of the U.S. So they are our supplier on that business, and there is a three-way partnership there. So listen, it's a category that's quite difficult to innovate in if I'm being honest with you. The innovation that we're going to -- that we will have is takes FDA approval, and it takes quite a bit to do it.

So there's no question that, that's a business that is, I think, harder to innovate on, but it is in our portfolio, and we'll continue to do what we need to, to get to growth. Listen, it plays a really important role, to be honest with you, with consumers and the health care systems and things like that. So -- but it is a complicated ownership structure to say the least. Dawn?

Yes. So let me just give you some specifics on Smokers' Health first. So to Brian's point, it is about 5%, 6% of the kind of U.S. business and in the quarter, we did see significant decline. The impact, so it has a 60 basis points impact on the total group in terms of -- that would take us to 3.6%.

And for North America, it would take minus -- it would take North America from minus 1.8% to minus 0.2%. So it is a big change in -- it is a big change in the quarter, and it has a size -- it has a disproportionate impact. That's the first thing to say.

The second thing to say in terms of the margin, to Brian's point, we're really pleased with the margin in the first half, 9.9% growth, up 140 basis points. And it's not just the number, it's also the quality of that earnings in terms of the delivery through gross margin, investment in A&P and R&D, good cost control in G&A, which has then enabled that margin to come through.

If I look to the second half, the shape that we've delivered in the first half, I would expect a similar type of shape in the second half in terms of strength in gross margin, investment in A&P and continued good cost control. If you think about the -- which is why we've updated the guidance to high single digit operating profit growth for the year.

If you look at the other moving parts, obviously, we've given the guidance on FX, M&A, interest and tax remain unchanged. So when you put it all -- when you put all of that together, I would say that we are comfortable where consensus is today.

And just on the full year, I mean, it looks like NRT, to your point, is 50, 60 basis points of headwind. So did that -- I know you just don't want to take out bits that aren't going well and getting to that game. So I guess it would be fair to say that without that, you've been around 4%, I guess, to the guidance point going down to 3.5%. Is that a fair conclusion?

Well, listen, I think, David, it's hard to kind of speculate on that kind of thing. I think we don't expect that drag to continue at that level in the back half. So we'll see where it ends up at full year, but no question, it will be a drag on the growth in a full year, and it's made it more challenging for us to hit that low end of the guidance.

Our next question comes from Tom Sykes from Deutsche Bank.

Yes. Sorry to bang on about the U.S. retailer trends again. But I think -- so there's obviously two issues. One is the stock levels per channel. And then another is the channel shift. So of the headwinds you've got at the moment, would you be able to split the volume headwinds between channels that are destocking and the channel shift?

Because Amazon, I think, in your scanner sales has grown by over 30% in the last 12 months, and the rest of your business is flat in aggregate. And so therefore, there's massive channel shifts occurring and so it would be helpful to try and understand what the shift impact versus destocking by channel is.

And then why wouldn't this occur in other countries? I mean I appreciate that there are differences in regulation, but you're very overweight clearly in the pharma channel in Europe. And it feels like this is something that's going to be pervasive across all economies eventually. So just interested in your thoughts on that, please.

Yes. Thanks for the questions, Tom. So listen, destocking by channel in the U.S. Listen, the channel shift is something that's been happening over time for quite a while. The drug channel does tend to have higher inventory levels. So there's a bit of an impact there. But the biggest impact is, frankly, I think you're seeing inventory pressure across channels, maybe a bit disproportionately in drug because they're struggling more.

And again, if you look at the Amazon growth, we do have stronger shares on Amazon. I talked about Sensodyne in the past, where we're in the low 20s in bricks and mortars and more like 28% on Amazon. So as we see more move to there, we're moving to a channel with higher share.

So I think it would be hard to break down exactly, but I think the bigger impact is the downward pressure as retailers in the U.S. are feeling the pressure of the economic environment, the foot traffic and all those things and trying to manage that situation because again, outside of our categories, there's other categories that they deal with that are much more affected than we are, and that impacts their overall financial performance.

When I think about other countries, to be honest with you, if you think about pharmacies in Europe. In Mainland Europe, 70% of our business goes through pharmacies, very, very low inventory levels in pharmacies. There is no real stocking up. We have people that call on pharmacies weekly in some cases for the bigger pharmacies and taking orders.

So it's not like there is a massive stock-up opportunity or that they carry really high levels. Now there are distributors in between sometimes our pharmacy channel and us. And distributors in general, are pretty good at managing inventory levels and things like that. So I think that's really the dynamic. I think, is very different in the U.S. than, let's say, in Mainland Europe, where the pharmacy model is just very different.

Sorry, just one follow-up. Would you see the channel shift at all impacting your operating margin? Is Amazon lower margin than other parts of the business, please?

No. Listen, on balance, if I look at e-com on a global basis and I look at that, it's all relatively similar, and it's all within our outlook and guidance. We expect that e-com will continue to grow. And by the way, Amazon is becoming less and less a piece of that as omnichannel has become more important. Walmart were really strong in walmart.com, and that's grown well. So that's all within the context of our outlook and the medium-term guidance we gave.

[Operator Instructions] Our next question comes from Olivier Nicolai from Goldman Sachs.

Just one question on my side actually. Going back the U.S. performance for VMS and for Respiratory Health. Would you say that you are losing share against private labels? Or is it more against other branded players?

In Respiratory Health, to be clear, we're growing share on the balance of Respiratory Health. If you remember, we've now put smoking in Respiratory Health. That has moved to private label. Frankly, we're primarily the branded player in the U.S. So that would be private label.

In VMS, it's probably more competitive pressures that we see. And again, where gained significant share a year ago, some of that we are now giving up. And as I said earlier, it's not our intention, and we're very focused on getting that back. But I would say that's probably the dynamic with the two.

But again, if you look at respiratory, Theraflu has grown share really well; Robitussin, okay; even Flonase is in a down market. So it's really about the smoking business, which is a down trade.

Thank you. We currently have no further questions. So I'll hand back to our speaker team for closing remarks.

All right. Well, listen, thanks, everyone, for joining us today. I look forward to catching up with all of you on upcoming roadshows and meetings, and please feel free to reach out to the IR team with any further questions. Thanks for the continued interest and support in Haleon.

Hello, and welcome to our half year results presentation. We're continuing to make real strides in transforming Haleon into a world-class consumer company with an agile, performance-focused culture. I'll come to the strategic progress we've made, but I'd like to start with an overview of our first half results.

In challenging market conditions, we delivered 3.2% organic growth, with good performances across EMEA and Lat Am and Asia Pacific. That progress was partially offset by weak U.S. consumer and retail environment that impacted our performance in North America.

We continued to make strong progress against our productivity agenda. That resulted in 9.9% organic profit growth, with continued investment in A&P and R&D to support our brands and categories. At the same time, 58% of the business either gained or maintained share. That's a good performance, demonstrating our brands are continuing to resonate with consumers.

While we expect our group organic growth to improve in the second half, North America is likely to remain challenged in the near term. We, therefore, expect fiscal year organic revenue growth to be around 3.5%. I will cover North America in more detail shortly.

Our confidence in the continued delivery of our productivity agenda means we are today increasing organic operating profit guidance to high single digit for the year. Dawn will give you more detail on our financial performance shortly. But first, I'll talk through the progress we are making on our Win as One strategy that I outlined at our recent Capital Markets Day and about the confidence it gives us in our medium-term guidance.

Win as One is all about how we'll go after the opportunity ahead to realize Haleon's full potential. As part of that, we set out 2 ambitions as we move into our next phase: to reach 1 billion more consumers by 2030 and to generate industry-leading shareholder returns. We will deliver those ambitions through our strategic priorities of growth, productivity and culture. Today, I'm going to focus on 2 of these strategic priorities, growth and productivity. I'll talk more about the progress we're making on our culture shifts at full year.

Starting with growth where we have 3 significant opportunities, first, closing the incident versus treatment gap. We talked about Otrivin Nasal Mist, our nasal decongestion brand, at Capital Markets Day. Today, 65% of consumers in our key markets suffer from nasal congestion, but only half of them treat their symptoms. We've launched Otrivin with an innovative mist dispenser, giving consumers a more comfortable experience and helping to drive mid-single-digit growth for Otrivin in the first half.

We've taken this new format to 8 markets so far and we expect to take it to 18 by the end of the year, including the U.S. and Italy. In fact, by the end of 2025, we will reach nearly 50% of the global nasal spray market. That's up from 10% last year, and by the end of 2026, we'll have taken it to 26 markets.

So far, we've seen encouraging results in all markets where we've launched, and we have achieved an average market share increase of 0.5 points. In the U.K., one of our initial launch markets, we've also seen significant penetration improvement. Today, over 50% of the users are new to the brand and we have strong repeat purchase rates.

Second, innovation-led premiumization and Sensodyne, which once again outperformed the market. Here, 45% of the population suffer from sensitive teeth, but only 1 in 3 of them use a sensitivity toothpaste.

With Sensodyne, we are focused on building long-term platforms for growth. Over the past year, we launched our new Clinical Platform, designed to deliver clinically proven and expert recommended solutions for consumers. The platform now includes 3 products: Clinical White, Clinical Repair and Pronamel Clinical Enamel Strength. These new products are supported by 11 clinical studies, which validate the claims and benefits of the range. And all 3 are performing well, supporting high single-digit organic growth for Sensodyne in the half as well as market share gains.

In the U.S., our largest market for Sensodyne, we've grown our share by over 50 basis points in the last 6 months. That's a direct result of our Clinical Platform, which we launched with Clinical White last year and Pronamel Clinical Enamel Strength at the start of this year. This has solidified our leadership in the global therapeutic oral health category and there is more to come.

Clinical White is now in 17 markets globally and we expect to take it to 21 markets by the end of the year. Similarly, Clinical Repair, our best sensitivity innovation that we launched in 2024, is now in 16 markets and we will be in 21 markets by the end of the year. And finally, we'll take Pronamel Clinical Enamel Strength, our new innovation launched in the U.S., to more markets in 2026. So we're very confident that the Clinical Platform and our pipeline will give us long, multiyear runway of growth for Sensodyne.

And finally, we're driving penetration among lower-income consumers. By that, I mean all consumer groups outside the highest income bracket. We're doing that in 2 ways: growing the reach of our current portfolio through our route to market and by innovating for lower-income consumer needs.

India is a good example of how we're expanding our route to market and leveraging our local knowledge and presence. During the half, we have more than doubled our direct coverage of small towns. By doing that, we are driving strong distribution for the INR 20 Sensodyne pack we launched last year. And that's supporting strong double-digit growth for Sensodyne in India during the period.

We're also innovating to develop new and more tailored offering for lower income consumers. In April, we launched Centrum Recharge in India. This new product taps into the need for affordable multivitamins that focuses on energy and are priced at INR 10. Consumer feedback has been strong.

In the Philippines, we're focusing on the well-being of children in lower income families through Centrum Kids, cementing Centrum's #1 position in that country. And we have a strong forward pipeline of other lower income offerings to come in the next 24 months.

I'd now like to look at our productivity agenda, where we have a real opportunity to increase gross margin. The work we've been doing over the last couple of years is delivering strong results. Our organic gross profit was up 5.7% in the half. In turn, that drove 160 basis points of gross margin expansion, giving us capacity to continue to reinvest in the business with strong investment in A&P and R&D. This resulted in organic operating profit increasing by 9.9% in the half and margin up by 140 basis points.

At Capital Markets Day, we talked about multiple initiatives underway in our supply chain to drive stronger gross margin. I'll give you some specific examples of the progress that we've made so far. One of our goals is to reduce our SKUs by 30% over the next few years. We're well on our way to achieving that, with our SKU count now by 16% since the beginning of 2024. We're also reducing our formulations by 25% to 30%.

We're well on our way towards reaching that goal. Let's bring this to life by looking at our site in Levice, Slovakia. Here, we have reduced the number of formulations by 25% in the last 2 years. At the same time, we've increased volumes by 25%, as we transition production from Maidenhead, which is driving material savings. And we're also looking to optimize the use of contract manufacturers against what we do in-house. Over the last 2 years, we reduced the number of contract manufacturers by 13%. These are only a few examples, but they all support our confidence in driving gross margin, which underpins our upgraded profit guidance for this year. We look forward to sharing more on our progress at full year.

I'd now like to come back to North America. As I mentioned, the U.S. market environment has become more challenging than we expected, with consumers cautious around spending. We are also seeing a channel shift from Drug to Dollar and Club. While we have strong positions in both those channels, this shift is causing some short-term volatility in inventory dynamics, where retailers are tightly managing working capital.

Our consumption is slightly up in the second quarter against a market that declined by around 0.5%. In that context, Oral Health continues to perform well, driving strong share gains. But we also saw seasonal weakness in allergy as well as more difficult trading conditions in Smokers' Health. Against that backdrop, we're focused on increasing our competitiveness as we expect the market to remain challenging in the near term. To do that, we've taken clear deliberate steps to return our North America business to stronger growth. Over the last quarter, we've made important leadership changes, including appointing a new President for North America, who has deep consumer experience and a track record of strong execution.

We're also driving improvement with Advil and Centrum. Advil has already started to show recovery in share towards the end of the quarter, and we're building on that performance with a new campaign that's just gone live. Early feedback from consumers has been very positive. And with Centrum, we're launching a number of new product innovations with improved formulations and consumer experiences as well as activating new promotions in the back half of the year. In short, the priorities are clear, and we are moving at pace to improve our performance.

I'll now hand over to Dawn to run you through the first half results in more detail.

Thank you, Brian. Good morning, everyone. We've made good progress in the first half, despite a more challenging environment in the U.S.

The key highlights are: continued outperformance in Oral Health; good, balanced growth across EMEA and Lat Am and Asia Pac; 9.9% increase in organic operating profit to deliver operating margin of 22.7%, in line with the prior year; 160 basis points organic improvement in gross margin, well ahead of our 50 to 80 basis points target; high-quality earnings with continued healthy investments in A&P and R&D; excellent cash performance, with a 17-day reduction in our working capital cycle versus half 1 2024 and flat versus the end of last year.

Now let's look at the half in more detail. Revenue grew 3.2%, with 2.4% from price and 0.8% from volume/mix. Price growth came from all regions. And on volume/mix, we saw a step-up from Q1 in EMEA and Lat Am and Asia Pac to drive a more balanced price, volume/mix, with Asia Pac delivering 2/3 of its year-to-date growth from volume. A 9% devaluation of U.S. dollar against sterling in the last 4 months as well as the impact of divestments last year from ChapStick and non-U.S. Smokers' Health impacted reported revenue, which declined 3.8%.

Moving to operating profit. Organic operating profit growth was strong at 9.9%, 140 basis points improvement. This enabled us to offset translational FX and divestment headwinds to maintain adjusted operating margin of 22.7%.

Looking at the drivers in more detail. The main driver of operating profit growth was gross profit up 160 basis points, significantly ahead of our target of 50 to 80 basis points. Pricing to offset inflation and benefits from the supply chain productivity program were the key drivers of gross margin expansion. At our Capital Markets Day, we shared a significant opportunity in supply chain productivity savings, which we expect to result in GBP 800 million of gross savings over the next 5 years.

In the near term, we expected savings to come from complexity reduction and operational excellence. These areas, alongside procurement savings, have been the key drivers of savings in the first half. The increase in gross profit has provided flexibility and agility in the P&L to enable us to continue to invest in A&P and R&D to drive growth. A&P spend increased 6.8% to 20.8% of sales as we continue to invest in our brands, geographic expansion and new product launches. We continue to focus on maximizing the effectiveness of our spend, improving our ROI by 4% versus the prior year. R&D spend was up 9.1% as we maintained and improved the superiority of our brands to drive growth. This increase was focused across key innovation areas, scientific evidence generation for new and differentiated claims, as well as digital enablement.

Across SG&A, we continue to drive end-to-end process simplification and cost discipline. We are on track to deliver and complete our GBP 300 million productivity program this year that we announced in 2023.

Let's now look at the growth drivers, starting with the categories. As Brian mentioned, Oral Health continues to deliver strong growth, up 8.7% in Q2 and 7.6% for the half. Growth was underpinned by innovation-led premiumization and geographic expansion. The key drivers of this growth are: double-digit growth in Sensodyne during Q2 led by innovations, including the Clinical Platform, as well as expert recommendations, which reached a multiyear high for the brand; parodontax also continues to deliver double-digit growth driven by innovation and our launch in China; we are confident in our strong runway for future growth in Oral Health, underpinned by a strong innovation pipeline and further geographic expansion.

Moving to VMS where Centrum outside of North America performed well, at high single-digit growth in Q2. Key highlights are: premium innovations, including Centrum Daily Kits in China and Korea; and expanding reach to lower income consumers with Centrum Kids in Philippines and Centrum Recharge in India. Overall, VMS was up 0.9% for both Q2 and the half, impacted by underperformance of Centrum in the U.S.

In Pain Relief, we grew 2.5% for both Q2 and the half. The key highlights are: market outperformance in Panadol due to the launch of Dual Action, a combination of paracetamol and ibuprofen, which uses the technology of Advil; and improving consumption in Voltaren. This was supported by the launch of new format patches and the rollout of systemic Voltadexibu in Germany and Italy. This leverages a new API that provides effective treatment with a smaller dose.

Respiratory Health was up 1.9% in the half, excluding the impact of U.S. Smokers' Health; a good performance on Otrivin driven by Nasal Mist, bringing new users into the spray category. This was offset by a softer allergy season in U.S. and China and weakness in U.S. Smokers' Health.

Theraflu was up double digit as we lapped the inventory reduction from PE containing products in the U.S. last year. Overall, this resulted in a decline of 2% in Q2 and 0.5% for the half.

Digestive Health declined 2.8% in Q2 and 0.3% for the half driven by high single-digit growth on Tums, thanks to the activation of the chewy bite innovation and mid-single-digit growth on Benefiber from our "Grow what feel good" campaign, both of which were more than offset by a negative phasing impact from ENO and a decline on Nexium. And finally, Therapeutic Skin Health & Other grew 6.1% in the half and 2.5% for Q2 due to growth in Fenistil and Zovirax.

Turning now to the regions, starting with North America. The U.S. market has been more challenging than we expected. As Brian mentioned, we saw a sequential slowdown in consumption from Q1 to Q2, from 3.2% to minus 0.4%. This was largely driven by: a deterioration in consumer confidence, retailer destocking and channel shifting as consumers seek more value. Against this, we grew ahead of the market by 70 basis points in the second quarter. Growth was driven by: oral health innovation, expert recommendations and successful activations such as gum expert on parodontax; Tums was driven by good in-market execution of Tum's Chewy bites; and Theraflu benefited from favorable comps versus the prior year. These were offset by a weaker allergy season, Smokers' Health and Centrum performance challenges. Overall, this resulted in revenue decline of 0.4%, with pricing 0.2% and volume/mix declining 0.6%. In North America, we delivered adjusted operating margin of 20.7%, up 80 basis points on an organic basis versus the prior year.

In EMEA and Lat Am, we delivered a good performance, sequentially improving our growth rate on Q1 and returning to volume growth. For the half, revenue grew 5.2% with price up 4.7% and volume/mix up 0.5%. Growth was driven by: innovation to drive premiumization, including the Clinical Platform in Sensodyne, Pronamel Kids and Voltaren patches; and by continued strength across the pharmacy channel. Looking across the region, we saw resilient consumer confidence in Europe and a more challenging picture in Lat Am, where the consumer environment has been weaker, particularly in Brazil and Mexico, due to a more uncertain geopolitical backdrop. In this region, we delivered adjusted operating margin of 25.3%, up 160 basis points organically versus the prior year.

Finally, in Asia Pac, we saw an acceleration in growth in Q2 to 5.9%, with 2/3 of the growth coming from volume. We continue to drive category growth and broaden our reach to lower income consumers. Revenue grew 5% for the half, 1.7% from price and 3.3% volume/mix. India had close to double-digit growth in the half driven by: expanded distribution across rural communities, Sensodyne INR 20 pack and Centrum Recharge innovations, and excellence in execution. We expect growth in India to accelerate in the second half from a continued focus on execution and an improved macro environment, thanks to government stimulus. China also saw good, mid-single-digit growth with strength in Oral Health and VMS underpinned by innovation and distribution build. Our e-commerce business is a particular highlight, which is over 1/3 of revenue and is growing high teens. We are working at pace to integrate the China OTC JV, where we are realizing the benefits of both flexible manufacturing and a more efficient route to market. Southeast Asia and Taiwan also performed well with strength across Centrum, particularly in the Philippines, and in Denture Care where we are driving penetration. In Asia Pac, we delivered adjusted operating margin of 23.3%, up 130 basis points organically versus the prior year.

Let's now look at the second half of the income statement. Adjusted diluted EPS grew 2.2%. In addition to the operating profit drivers I have already outlined, EPS growth also benefited from: a lower net interest charge driven by debt reduction and favorable foreign exchange on U.S. dollar-denominated debt; lower noncontrolling interest, following our purchase of the China JV; and a lower share count, following the repurchase of our shares over the last year. As a final point, our adjusted effective tax rate was 24.4%, in line with our guidance for the full year.

Turning now to adjusting items, which were significantly lower than last year at GBP 40 million. The key items included: a net amortization and impairment charge for intangible assets of GBP 26 million, restructuring costs of GBP 26 million relating to the GBP 300 million productivity program and the closure of the Maidenhead site, and a GBP 12 million credit largely related to the recovery of the balance from legacy operations in Lat Am. We have not yet incurred any of the onetime costs associated with the supply chain productivity program we shared at Capital Markets Day.

Turning now to cash. Haleon is a highly cash-generative business. We delivered GBP 734 million of free cash flow in the half, which after stripping out the net proceeds from the divestment of ChapStick last year, was GBP 184 million more than the prior year. At Capital Markets Day, we highlighted a significant opportunity in working capital and set a target of 30% reduction in our working capital cycle over the next 5 years. We have made good progress versus last year with a 17-day reduction in our working capital cycle versus half 1 '24 and flat versus the end of last year. This came from more efficient freight and improved operational efficiency in our plants. Other contributors to the improvement in cash flow were: GBP 106 million lower restructuring costs and GBP 66 million in total from a combination of lower cash interest and dividends to our China JV partner.

On CapEx, our intention is to spend on average 4% of sales over the next 3 to 5 years as well as a shift in the nature of spend to be more weighted to growth and productivity compared to maintenance. In the half, CapEx increased from 2% to 2.4% of sales, with a higher weighting of spend towards growth and productivity.

Moving on to leverage. Net debt reduced by GBP 187 million in the half, keeping leverage flat at 2.8x net debt to adjusted EBITDA. This reduction was driven mainly by translational foreign exchange gain on our U.S. dollar bonds. Our free cash flow was invested in: GBP 174 million in acquiring the remaining 12% stake in the China joint venture, GBP 370 million on share buybacks and GBP 415 million on dividends. We also repaid from cash the $1.75 billion bond that matured in March this year. Our next major maturity is the EUR 850 million bond due in March 2026. As a reminder, around 75% of our bond debt is currently at a fixed rate of interest.

We have a track record of disciplined capital allocation. Our priorities are focused on investing for growth, bolt-on M&A and returning excess cash to shareholders. All of this is underpinned by our strong investment-grade balance sheet. In line with our policy to pay 1/3 of the prior year total dividend at interim, the Board has declared an interim dividend of 2.2p per share, a 10% increase on the prior year.

Now let me turn to our outlook for 2025. We are upgrading our profit guidance to high single-digit organic profit growth for the year given our strong progress on productivity initiatives. In EMEA and Lat Am and Asia Pac, we expect to see an improving trend in revenue in the second half driven by innovation, distribution build and macroeconomic improvement. Given the weakness in the U.S., we no longer anticipate an improvement in the second half. We, therefore, expect our full year organic revenue growth to be around 3.5% for the year.

So in summary, we delivered strong operating profit and cash. We continue to build flexibility and agility in our P&L by unlocking productivity savings. This allows us to invest in A&P and R&D to drive growth. Overall, this will drive operating leverage, strong EPS growth and free cash flow generation.

With that, I will hand back to Brian.

Thank you, Dawn. So to sum up, we've delivered good performance in EMEA and Lat Am and Asia Pacific in the half that was partially offset by a more challenging environment in the U.S. And we continue to make significant progress against our productivity agenda, driving strong profit growth.

I remain confident in the opportunities we outlined at our Capital Markets Day and on our medium-term guidance of 4% to 6% annual organic revenue growth with high single-digit adjusted operating profit growth at constant currency. Thank you for your continued support and interest in Haleon.